Cash piles up in Ja­pan while spend­ing wane

The Pak Banker - - 6BUSINESS -

Ja­panese com­pa­nies and house­holds piled up cash at record lev­els in the last quar­ter of 2015, of­fer­ing lit­tle sup­port for an econ­omy that some an­a­lysts forecast is at risk of con­tract­ing again. Cor­po­rate as­sets in cash and de­posits reached a record high of 246 tril­lion yen ($2.2 tril­lion), ris­ing for the 29th con­sec­u­tive quar­ter, ac­cord­ing to Flow of Funds data re­leased by the Bank of Ja­pan on Fri­day. House­holds' as­sets rose to 902 tril­lion yen, the highest level on record, mark­ing nine straight years of growth.

The data adds to con­cerns among econ­o­mists that Ja­pan's re­cov­ery con­tin­ues to be un­der­whelm­ing af­ter econ­omy con­tracted in fourth quar­ter. House­holds are tight­en­ing their purse strings as wages are stag­nant while com­pa­nies are hes­i­tant to in­vest at home amid global eco­nomic un­cer­tainty. "Ja­pan's vir­tu­ous eco­nomic cy­cle is quite weak," said Hideo Ku­mano, an econ­o­mist at Dai-ichi Life Re­search In­sti­tute and a for­mer BOJ of­fi­cial. "I ex­pect a very frag­ile re­cov­ery this quar­ter."

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