Virtuous economic cycle of “the eve of the invasion of Ukraine” = Shunsuke Motani
In this column, we have developed a scenario in which the world economy regains some momentum due to the re-acceleration of the Chinese economy. However, with the realization of Russia’s invasion of Ukraine, which was thought to be impossible in common sense, it became difficult to make a decision at once.
At the time of writing this article, only 21 days have passed since the invasion of Ukraine began, and the situation is too fluid. From early standstill agreements to prolongation, North Atlantic Treaty Organization (NATO) intervention, Russian civil war, and nuclear use, all possibilities are still undeniable. The impact of economic sanctions on us, from macroscopic inflation to microscopic supply chain disruption, is too great to be comprehensively predicted.
In the financial markets, expectations for a ceasefire have been high from the beginning, and the line of sight has been lowered as it has become longer and more complicated.
What an economist can do in such a situation is to first accurately grasp the state until just before the invasion, which is the starting point of change. Some of the February statistics have begun to be released, but the Japanese trade statistics and major Chinese statistics released on March 16 will be helpful in determining the business cycle.
Figure 1 shows trends in Japan’s export volume index by region, including up to February. The re-acceleration of the Chinese economy, which I have insisted on, is also making a positive impact on the Japanese economy. The European economy is maintaining a decent momentum, and the United States is slow …
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