Goldman Sees China Spat Weighing on Japan’s GDP Via Tourism Hit
Rising tensions with China may shave about 0.2 percentage point off Japan’s gross domestic product growth if tourism and the export of consumer goods to the world’s second-largest economy decline, according to economists at Goldman Sachs Group Inc.
The analysts base their calculations on the fallout seen from a dispute China had with South Korea in 2016-2017 over the deployment of a missile defense system known as Thaad, and potential for the current China-Japan tensions to persist.
A halving in the number of tourists from mainland China and Hong Kong would lead to a 0.2 percentage point drag on growth, Goldman’s Japan economists Tomohiro Ota and Yuriko Tanaka wrote in a report. That hit may be mitigated by an increase in visitors from elsewhere and an uptick in domestic tourism, resulting in a net 0.1 percentage point hit, they wrote.
Restrictions on Japanese exports of some consumer goods would add another 0.1 percentage point blow to growth, according to the economists. If export restrictions were extended to include non-consumer goods, “the impact on GDP could become several times larger,” they warn. The hit would be further amplified if Beijing also went on to restrict rare earth supplies to Japan, the economists said, though they didn’t analyze that possibility in their calculations.
Tensions developed in November after Japan’s Prime Minister Sanae Takaichi said that if China fought to take control of Taiwan, it could amount to a “survival-threatening situation” for Japan — a classification that would provide a legal justification for Tokyo to potentially deploy its military, in concert with the US. The Chinese government accused Takaichi of meddling in its internal affairs and has demanded a retraction.
Source : Bloomberg.com
