Meanwhile, Japan’s government spokesman said the basic trend is “gentle recovery.” According to the Bank of Japan, the economy is improving slowly despite the GDP figures showing that exports fell in October.
“Emerging economies will likely emerge from the doldrums helped by solid growth in advanced economies. Exports will move sideways for the time being, but will likely recover moderately,” said Haruhiko Kuroda, Bank of Japan governor.
According to Genzo Kimura, economist at SuMi Trust in Tokyo, the contraction is due to Japanese companies having become more cautious about outlook -due to headwinds from China- which made them hesitant about their inventories. He says there are plenty of reasons to be optimistic however, as the Olympics in 2020 is steadily approaching and this is lifting the construction sector.
“The construction sector is enjoying a boom – any construction companies are good, but particularly the ones in the coastal area”, said Kimura. “With regards to the construction sector, there are five companies that will benefit especially: Penta-Ocean Construction, Kumagaigumi, Shimizu Construction, Obayashigumi and Kashima. They all focus on Tokyo, infrastructure projects or technology,” he added.
Tourism is also a hot area. “We welcome more and more tourists,” said Kimura, and added: “The target is 20 million people by 2020, which will easily be met by 2016.”
On the downside, the long awaited corporate governance reforms have not been as successful as hoped for so far, and Kimura deems them to have brought “no significant progress.” According to the Tokyo-based economist, there are still many scandals in the residential real estate sector. “We’re in the surgery room regarding corruption within construction,” he said.
Regarding the question of expanded quantitative easing, Kimura remains pragmatic. “There’s always the pressure to expand,” he said. Some commentators forecast Bank of Japan action in January.
