Research Team at Nomura, suggests that the turmoil on financial markets since beginning of year may have had an impact on the Japanese economy. Key Quotes “Current conditions DI down, share prices and weak Chinese economy weigh on sentiment: The current conditions DI in the January 2016 Economy Watchers Survey was down 2.1 m-m at 46.6, following a rise in the DI for December 2015. The breakdown shows a fall of 0.3 to 54.8 for the employment-related DI and particularly large deteriorations for the household activity-related DI, down 2.1 at 45.6, and the corporate activity-related DI, down 3.0 at 45.9. Some respondents pointed to a decline in willingness to spend among consumers because of weaker share prices, and sluggish exports because of the lackluster Chinese economy. Some positive comments on future conditions, but seasonally adjusted future conditions DI falls: Meanwhile, the future conditions DI, an indicator of how respondents view the economic outlook over the next two to three months, was up 1.3 m-m at 49.5. The employment-related DI deteriorated, down 0.8 at 54.4, but the household activity-related DI and the corporate activity-related DI both improved, up 1.6 at 48.8 and 1.0 at 49.2, respectively. Comments by respondents in the survey indicated that despite concerns about the Chinese economy, there were as yet no clouds over the outlook for growth in overseas tourists to Japan, with ongoing strong expectations for inbound demand. However, the seasonally adjusted future conditions DI was weak, falling 1.7 m-m to 49.4. Sharp fall in share prices since beginning of 2016 may have led to deterioration in sentiment: The Economy Watchers Survey is highly susceptible to financial market movements. The average for the Nikkei Average over the survey period of 17,109 was 1,806 lower than the average over the survey period in December, and we think this sharp decline may have led to the deterioration in grass roots sentiment. The Bank of Japan announced its negative interest rate policy on 29 January. Although the survey period for the latest Economy Watchers Survey ran from 25 through 31 January, there were no comments regarding negative interest rates.” For more information, read our latest forex news.