Japan: Credit demand has kept contracting

- Credit demand has kept contracting
• Pace of growth in money stock has been firming, while for bank loans it has decelerated
• Widening of the gap between the two is a reflection of weakened demand for loans by companies, savings of which are increasing
• We remain doubtful about a scenario in which the BoJ’s new fund supply scheme could boost bank lending
- Improvement in consumer sentiment slows down
• Consumer sentiment index rose for the sixth consecutive month by 0.7pts mom to 43.5 in June; improvement pace has slowed down
• Consumer perception of “the value of property (asset) growth” also worsened for the second consecutive month
• Industrial production was revised up 0.2pts to +0.1% mom in May. Manufacturing sector capital utilization also rose 0.8% mom to 72.5%
- Demand for loans remains weak
According to the Senior Loan Officer Opinion Survey on Bank Lending Practice in July, the DI for demand for loans among firms worsened 7pts from the previous survey to -17
CreditSuisse Japan Economics Weekly 20100722

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