Tomo Kinoshita, Research Analyst at Nomura, suggests that the downside risks for the Japanese economy have been growing recently. Key Quotes “Since the start of the year, financial markets have been roiled by yen appreciation and share price declines and in 2016 H2 we think companies will put off capex and consumer spending will suffer fallout as the negative wealth effect kicks in. All the same, corporate earnings, particularly among nonmanufacturers, remain relatively robust and we think it unlikely that corporate sentiment will deteriorate sharply and lead the economy to stall. If global financial markets settle down, we expect the Japanese economy to get back to a growth track. On the other hand, if global financial markets remain turbulent, that could well have an adverse impact on the Japanese economy via deterioration in overseas economies and yen appreciation. From that standpoint, we think the focus for now needs to be on downside risks for the economy.” For more information, read our latest forex news.