The Organization for Economic Co-operation and Development (OECD) maintained its global growth forecast for 2018 at 3.7%. The Japanese economy is expected to grow by 1.2% in 2018, with growth slowing to 1% by 2019.
The OECD believes that the Bank of Japan should continue with its loose monetary policy until it reaches its 2% inflation target. The Japanese central bank has pursued fairly aggressive quantitative easing in recent years, which has seen the country’s debt rise exponentially. Japan has also had to contend with rising geopolitical tensions with North Korea.
The iShares MSCI Japan ETF (NYSE:EWJ) gives investors the opportunity to track what has been an impressive run in the Japanese stock market in recent years. The ETF has climbed 18% in 2017. Some of its top holdings include Toyota Motor Corp, Sony Corp, and Softbank Group Corp.
On November 28 the Japanese government reaffirmed its view that the Japanese economy is in the midst of a moderate recovery. The economy has seen an increase in capital spending, exports, and private consumption, though some long-term issues remain. Like some of its Western European counterparts, Japan is contending with the crisis of an aging population that threatens to put an increasing strain on its public resources while draining the labour pool.
As long as the Japanese central bank continues its loose monetary policy it is more than likely that its stock market will be a lucrative destination for investors.
