Economics professor Kazuo Ueda has been nominated as the Bank of Japan’s (BOJ) next governor, tasked with navigating a way forward after a decade of extraordinary monetary easing.
The respected economist, described as careful and cautious, was a surprise pick for the change of guard after the outgoing governor’s deputy reportedly turned down the job.
The position will likely be tough going, with Ueda facing pressure to join international peers in tightening while avoiding panic by suddenly unwinding the bank’s decade-old monetary policy.
In another example of the headwinds facing Japan’s economy, data released Tuesday morning showed that gross domestic product (GDP) expanded just 0.2 percent in the last quarter of 2022, a smaller rebound than expected despite the long-awaited reopening of the country to tourists.
Ueda was nominated on Tuesday by Prime Minister Fumio Kishida, according to a government document handed to reporters, a decision that must be approved by legislators.
But that is expected to be largely a formality given that Kishida’s ruling coalition commands a healthy parliamentary majority.
A former BOJ policy board member, Ueda will take the reins from Governor Haruhiko Kuroda, the central bank’s longest-serving leader and the architect of its ultra-loose policies.
Since Kuroda became governor in 2013, his attempts to boost Japan’s moribund economy have ranged from a negative interest rate to spending vast sums on government bonds.
In the past year, he has held firm, even as other central banks hiked rates to tackle inflation, with the resulting policy gap causing the yen to slump against the dollar.
Kuroda, 78, is due to step down on April 8 when his second term ends.
He leaves Ueda, 71, the challenge of working out the bank’s next steps, said Saori N Katada, an international relations professor at the University of Southern California.
“This is probably the hardest job at the worst time to take up. Professor Ueda is very brave to accept it,” she told the AFP news agency.
Japan’s easy-money policies have become “extreme … and no one knows how to get out of it”, as sudden policy pivots could “jeopardise fiscal sustainability”, Katada said.
“In the next five years, though, the BOJ has to change course” because rising inflation, the weak yen and high government spending are unsustainable.
The yen tumbled from about 115 against the dollar in February 2022 to a three-decade low of 151 in October.
The Japanese currency has since recovered to about 132 against the dollar and briefly strengthened when Japanese media outlets first reported Ueda would be nominated instead of Kuroda’s dovish deputy Masayoshi Amamiya.
Amamiya, who reportedly turned down the job, had been seen as a continuity candidate likely to keep the BOJ’s stimulus policies.
But that does not mean Ueda — who has a PhD in economics from the Massachusetts Institute of Technology and served on the BOJ’s policy board between 1998 and 2005 — should be viewed as a hawk, analysts said.
“The current BOJ policy is appropriate, and I think it’s important to maintain monetary easing policy for now,” Ueda told reporters on Friday.
Katada described him as “one of the most respected macroeconomists in Japan” and a good communicator who is “relatively cautious”.
Kazuo Momma, executive economist at Mizuho Research and Technologies and a former assistant governor at the central bank, told AFP that Ueda had “never been hawkish with regard to the BOJ’s monetary policy”.
The bank’s ultra-loose monetary policy dates to the era of former Prime Minister Shinzo Abe, whose “Abenomics” plan aimed to stimulate growth and banish the deflation that plagued Japan’s economy from the end of the 1980s boom.
Inflation hit a multi-decade high of 4 percent in Japan in December — above the BOJ’s longstanding 2-percent target — fuelled partly by soaring energy bills.
But because the trend has not been driven by demand or steady wage increases, the BOJ has said it sees no reason to abandon its dovish policies.
So Ueda “will assess very carefully whether the 2-percent inflation target will be achieved in any reasonable time horizon, and take a cautious position in terms of possible policy changes going forward”, Momma said.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
