Japan's consumer confidence rose from February's five-year low in March after households said they were more optimistic about job prospects. The sentiment index climbed to 36.7 last from 36.1 in February, the Cabinet Office said today in Tokyo.
The gain in confidence is unlikely to be sufficeient to spur consumer spending as stocks fall, oil and food prices rise and risks increase for a slowdown in global trade.
In fact world trade growth declined sharply in 2007 and is expected to slow further this year as financial turmoil and rising commodity prices further depress global economic activity, according to a report from the World Trade Organisation out today. Preliminary estimates suggest the volume of world trade rose 5.5 per cent in 2007, down from a robust 8.5 per cent in 2006. Based on the latest gloomy global output forecasts by the International Monetary Fund, the WTO says trade growth this year could slip to 4.5 per cent, its lowest rate since 2002.
At the same time Japanese consumers are increasingly strapped for cash as inflation in basic lifestyle items outpaces growth in their paychecks. And households are becoming increasingly concerned about prices, with some 42.3 percent of the people interviewed who felt conditions are worsening citing prices as a reason, more than double the share of a year ago. Today's report also showed that 86 percent of consumers expect prices to keep rising.
