� Business Monitor International Ltd Page -- continues to decline, with real-adjusted wages falling since mid----- and this will likely continue in the face of unfavourable demographics, a weakening currency and rising inflation, thus keeping domestic demand for goods relatively muted and therefore keeping our trade and freight forecasts in check. A key development is the Trans-Pacific Partnership (TPP). ...With Japan sourcing only -- of its agricultural and food imports from TPP members and Malaysia as little as -- , we see room for further gains, largely at the expense of EU and Latin American producers. While the TPP will also offer tailwinds to Australia s agricultural sector - improving on the preferential tariff terms offered under the Japan-Australia Economic Partnership Agreement and expanding the country s market access - we believe the US is likely to be the biggest winner given that it does not currently have a free trade agreement with Japan, which is one of the most important agricultural importers within the TPP bloc. While Japan s direct exposure to China is relatively low with exports to China as a share of GDP sitting at just -.- , we believe that Japan s economy is not adequately prepared for a negative external shock, which would have a detrimental impact on Japan s shipping industry too. The huge build up in public debt and the ultra-low interest rate environment in place are undermining productivity, with businesses increasingly looking overseas for investment opportunities. Should external demand face a negative shock from falling Chinese demand, this could be the trigger for a contraction in Japan s real GDP growth, bringing into question the viability of Abenomics and causing a crisis of confidence in the country s fiscal trajectory.
...Low coal prices are increasing its consumption in Japan, benefiting rail freight volumes with transport of the fuel catered by the mode. Nippon Airways Cargo (ANA) is scaling down operations by ending charter agreements and certain cargo flights. This is a consequence of lower demand, with air freight service contraction restraining growth in tonnage. Japan is seeking to enhance trade and economic cooperation with African countries with the Japan External Trade Organisation (JETRO) recently opening an office in Ethiopia while the leaders of Japan and Kenya met in August, signing a treaty to protect investment and agreeing to promote trade between the two countries. We forecast road freight to increase by -.- in ---- to -.-bn tonnes, rail freight by -.- to --.-mn tonnes and air freight by -.- to -.-mn tonnes. ...Total trade real growth in ---- is projected at -.- and to average -.- over the medium term. Main trade partners will be China, the United States, Australia, South Korea, Saudi Arabia and the United
...According to our projections, in ---- and ----, Japan s total trade will enjoy real growth of -.- and -.- respectively, a moderate slowdown on the -.- and -.- recorded in ---- and ----. This will be driven fairly evenly by imports (-.- real growth) and exports (-.- ). ...
