Japan's economy seen pressured by Trump's TPP plan, protectionist bent - Reuters poll

By Kaori Kaneko

TOKYO (Reuters) - Japan's economy could face pressure from U.S President-elect Donald Trump's plan to withdraw the United States from a multinational trade deal and on any protectionism during the New York billionaire' s term of office, a Reuters poll of analysts showed.

Although expectations Trump will boost fiscal spending and set U.S. growth on a higher gear were seen as a boon to Japan, concerns around trade policy under the incoming administration highlighted the world third-largest economy's dependence on exports.

Thirty of 33 analysts in the Reuters poll said Trump's plans to withdraw the United States from the Trans-Pacific Partnership (TPP) trade pact will have an adverse impact on Japan, and raised concerns about his campaign threats to slap import tariffs on Mexico and China.

They were also cautious about a reversal of the yen's recent weakening trend, as global policymakers remained wary about Trump plouging ahead with his fiery campaign rhetoric on trade, immigration and foreign policy when he takes office on Jan. 20.

The poll results backed a separate Reuters survey of Japanese corporates earlier in the week that showed well over a third of firms saw risk of a contraction in global trade from a possible rise in U.S. protectionism.

Takeshi Minami, chief economist at Norinchukin Research Institute, said uncertainty about how Trump will set trade policy "will likely have negative impacts on Japan as China and Mexico, where Japanese companies have factories, could be targets."

The poll, taken between Nov. 29 and Dec. 7 found, also showed a majority of analysts see Japanese exporters benefiting if Trump meets expectations on corporate tax cuts and infrastructure investment

"There are expectations for positive spillover effects to Japan from the U.S. economy under President-elect Trump," Minami said.

Japan's economy grew an annualised 1.3 percent in July-September, much less than a preliminary 2.2 percent estimate, as capital expenditure and inventories were revised down.

The economy is expected to expand 1.0 percent in the fiscal year to March and will maintain that modest growth rate in the next two years, the poll of over 40 economists, taken before the third gross domestic product data were released, found.

BOJ'S TO OFFER MORE STIMULUS

Twenty-one of 31 analysts who responded to an extra question on the Bank of Japan's next move still think the central bank will ease further. But ten expect the BOJ's next action will be unwinding its ultra-easy monetary policy, a higher number than in the previous survey.

About 80 percent of the analysts who expect more easing said it would come sometime in the latter half of next year. Some said the BOJ will do so only if the yen sharply appreciates again.

"We expect the BOJ will continue the current pace of monetary stimulus under the new framework for a while," said Hidenobu Tokuda, senior economist at Mizuho Research Institute.

"But there is a chance the BOJ will adopt additional stimulus if the yen spikes."

In September, the BOJ shifted its policy target to interest rates from base money after three years of aggressive asset purchases failed to accelerate inflation to its 2 percent target.

Medians showed the BOJ keeping its target of 10-year Japanese government bond (JGB) yields at around zero percent until the end of next year and maintaining the minus 0.1 percent interest rate imposed on some excess bank reserves.

Some analysts expect the central bank will start cutting the annual pace of increase in outstanding JGB holdings in the second quarter next year from the current 80 trillion yen.

(For other stories from the poll)

(Reporting by Kaori Kaneko, polling by Shaloo Shrivastava and Khushboo Mittal; Editing by Shri Navaratnam)