Published on 24 Feb 2024 on Insider Monkey via Yahoo Finance
11 Best Japanese Stocks To Buy In 2024
In this article, we discuss 11 best Japanese stocks to buy in 2024. If you want to skip our discussion on the Japanese economy, head over to 5 Best Japanese Stocks To Buy In 2024.
Japan has effectively managed the challenges posed by the pandemic and the energy crisis. Despite facing headwinds from weak global growth, geopolitical tensions, and high inflation, the country has demonstrated resilience. According to a recent OECD report, to enhance the economy's ability to withstand shocks, adjustments to monetary policy settings have begun, and fiscal consolidation is emphasized due to high public debt. The focus on rebuilding fiscal buffers involves implementing a credible medium-term fiscal framework to reduce the debt-to-GDP ratio. The Japanese economy relies on domestic demand as global uncertainty affects external demand. A tight labor market is expected to contribute to higher wage growth in 2024-25. Rising wages, government subsidies, and a new fiscal package are anticipated to support private consumption and investment. External risks include the global economic outlook, geopolitical tensions, and supply-side constraints, while potential upside factors involve stronger-than-expected recovery in tourism and domestic consumption.
Japan is considered to be at a turning point with inflation likely to settle around the 2% target. Consumer price inflation, excluding fresh foods, has exceeded the target since April 2022. Recent positive outcomes in annual wage negotiations contribute to a virtuous cycle of redistribution and growth, signaling a move towards monetary policy normalization, as per OECD. Projections indicate headline and core consumer price inflation of around 2% in 2024-25 as government subsidies end, the output gap closes, and wage growth gains traction. While banks appear resilient in the near term, potential vulnerabilities need monitoring, including the phase-out of emergency support measures, increased foreign interest rate and loan risks, a high share of floating-rate housing loans, and rising debt-to-income ratios. Continued policies to support mergers and improve business models of regional banks, especially in the face of demographic challenges, are recommended.