Aurelia Butler

Sri Lanka’s central bank has confirmed the country has missed a deadline for foreign debt repayments, the first sovereign default in the Asia-Pacific region this century, according to Moody’s.A 30-day grace period for missed interest payments on two international sovereign bonds expired on Wednesday, forcing Sri Lanka into what some analysts called a “hard” default as the country confronts an economic and political crisis. The last Moody’s-rated sovereign borrower to default in Asia was Pakistan in 1999.President Gotabaya Rajapaksa’s government said last month that Sri Lanka would stop repaying its international debt to conserve foreign currency reserves for imports such as fuel, medicine and food.Sri Lanka, which has never defaulted before, owes about $51bn in overseas debt to international bondholders as well as bilateral creditors including China, Japan and India.At a briefing on Thursday, Nandalal Weerasinghe, the central bank governor, confirmed that Sri Lanka’s creditors could now consider the country technically in default.“We announced to the creditors, we said we are not in question to pay that. If you even don’t pay after 30 days . . . then probably from their side they can consider it as a default,” he said. “Our positions are clear. We say until they come to restructure we will not be able to pay.”But the central bank disputed that it was a hard default, calling the move “pre-emptive”.S&P last month downgraded Sri Lanka’s foreign currency ratings to “selective default” on the missed interest payments. Analysts said that rising global interest rates, high energy prices and a surge in inflation were piling pressure on import-dependent developing economies such as Sri Lanka.The island borrowed heavily to fund infrastructure-led growth after the end of its civil war in 2009, but policies including a 2019 tax cut and the loss of tourism during the pandemic left it unable to refinance in international debt markets.The crisis has triggered widespread pain for Sri Lanka’s population, with a scarcity of fuel leading to long queues for petrol and multi-hour power cuts. The currency has also plunged, exacerbating political unrest.The cabinet, including Gotabaya’s brother Mahinda, the prime minister, resigned last week as attacks by pro-government supporters against a growing protest movement triggered a wave of violence across the island.Ranil Wickremesinghe, the newly appointed prime minister, said this week that the Treasury was struggling to find $1mn to pay for imports.

Sri Lanka has begun negotiations with the IMF over a loan programme and is appointing advisers for debt restructuring talks with its creditors. But it lacks a fully functioning government, including a finance minister, and analysts expect any deal to take months.The missed payments, for interest on two $1.25bn international sovereign bonds maturing in 2023 and 2028, could trigger cross-default clauses that would bring much of Sri Lanka’s debt due before it has begun formal restructuring talks.A Sri Lankan government bond maturing in July this year is trading at about 45 cents to the dollar, with longer-dated bonds at even lower values.JPMorgan on Wednesday assigned an overweight rating to Sri Lanka bonds, indicating that it expected bond prices to rise in the coming months.“Twists and turns are likely to materialise in the months ahead,” JPMorgan wrote. “However . . . we think risk-reward is favourable to start building long positions.”Additional reporting by Hudson Lockett More

Times of big global upheaval may not be good for the world, but the dirty secret of journalism is that regular opinion writers find them professionally quite rewarding. Books, however, are a different matter. The economic shocks have been rolling in so fast that the slow process of book publishing leaves years of painstaking work hostage to fortune. I finished my last book, The Economics of Belonging, in the early months of 2020, just too soon to discuss a pandemic that in weeks turned the global economy upside down. The paperback edition, which came out in the US on Tuesday, gave me a chance to think about what has changed (though after I sent off the new preface, Russia attacked Ukraine, leaving the book outdated again). For me, the most “intriguing” thing about the pandemic is that some of the policies I advocated in the book suddenly fell massively into favour. They include strong macroeconomic stimulus for a “high-pressure economy”, policies helping to rebalance power in the labour market and the digital economy (and, of course, the combination of the two, where high demand pressure improves the bargaining power of workers), and easier conditions for leaving bad jobs to look for better ones. The US government’s “Bidenomics”, in particular, is a great test case.In the book, I argued we had had far too few of these things in the past. The cost, I wrote, had been poor growth and productivity performance, and also rising unfairness because these outcomes disproportionately hurt those on lower wages and on the margins of the labour market. Among other things, I concluded it was crucial to be much less timid about macroeconomic demand stimulus.This week, these arguments have been supplemented by new research from the Bank for International Settlements. Here are three key findings. First, on average, recessions increase inequality. Second, increases in inequality are sticky, and it does not quickly come back down by itself. This is called “inequality hysteresis” in the jargon. (The analogy is with the “hysteresis” where output lost in a downturn is gone forever as post-recession economies rarely return to their pre-recession path). And third, higher inequality blunts the normal macroeconomic policy tools used to fight inflations. Together, these findings imply there are several equilibrium paths that the economy could end up on: some where recessions are rarer or shallower, inequality is lower and output and productivity are higher; and some where recessions are more frequent or deeper, inequality is higher and output and productivity are lower. Which an economy follows depends in part on how much firepower policymakers are willing to use to keep economies growing, with particular concern for those at the bottom.This is the background from which I have approached the great post-pandemic inflation debate. As I wrote very early on, a bout of inflation would be a welcome sign that we had got demand policies right. And I have argued that the subsequent increases were, in any case, due to, yes, transitory supply shocks. The fact that we have had one unforeseen supply shock after another — which nobody disputes — is not a reason to think each of them is not transitory.But suppose it is true, as most people now seem to think, that record-high inflation is the price we are paying for a high-pressure demand policy, how well is that policy delivering for the price? Let us look at the US, which is clearly the economy that has taken most seriously the need for high-pressure demand if not in so many words. Take productivity first. Increasing at an annual average rate of 1.1 per cent since end-2019, output per hour worked has performed reasonably well — better than in the immediate pre-pandemic years but still disappointing compared with the faster labour productivity growth of the more distant past. Note, however, that output in the US economy is greater today than projected before the pandemic — and you should pause to acknowledge what an extraordinary feat that is. At the same time, fewer people are in work than three years ago, and many fewer than would have been expected on the preceding trend. Put together, this means productivity is significantly higher than projected before the pandemic: output per hour has grown unexpectedly fast.What about inequality? The great Atlanta Fed wage growth tracker usefully breaks down wage growth by wage level. As its chart (reproduced below) shows, wages are growing much faster among the poorest paid than among the highest paid, and this gap has been increasing fast — in fact, it is the highest on record. Caveat: these should not be seen as entirely real-time measures (they are 12-month moving averages of year-over-year wage changes for the same individuals). But the pattern shows convincingly that wages have become less unequal in the pandemic, that the most recent wage growth has been particularly strong at the low end and, therefore, that it is likely that the poorest have seen real wage increases even as the highest paid have seen real wage cuts. (Another caveat: the very richest are not captured; data shortcomings mean the tracker excludes those earning more than $150,000 a year.)So far, then, the economics of belonging thesis is holding up quite well. Better wages at the bottom and higher productivity than expected are a pretty good reward for a rise in inflation — at least if inflation does indeed come down reasonably soon in the absence of new negative shocks to global supply. With US profits soaring as a share of real value added (see chart), there is little sign of unsustainable wage demands forcing companies to fuel price inflation. For more on this sort of argument, read Adam Tooze’s latest write-up on the debate over wage pressures on companies’ pricing. And remember that inflation was unexpectedly low in the previous decade, so the current increase just helps to bring price levels in line with what the Federal Reserve encouraged people to plan on when making long-term lending and borrowing decisions.The contrast with other countries is instructive. In the UK, output has not held up as well as in the US. And the distribution of wages has behaved quite differently. As the chart below shows, in the second half of 2020 the lowest earners did best. But since then, the highest earners have caught up and then some, with the two years showing a clear widening of inequality.Inflation rates, meanwhile, are comparable between the two countries. What accounts for the difference in the output and inequality developments that has come with this inflation? The likely answer is precisely the much punchier stimulus and more consciously redistributive policy choices in the US compared with the UK. We should not write off Bidenomics yet, nor accept the new narrative that all a high-pressure economy brings is immiserising inflation.Other readablesA new paper contributes to the literature showing how financial crises can spawn political extremism. The study shows that greater exposure to foreign-currency loans in Hungary, which lead to greater financial distress as the exchange rate moves, results in greater support for the populist far right.News in the world of universal basic income: US cities are experimenting with a UBI for artists, and a group of Polish municipalities plans a two-year UBI pilot for 5,000 people. In the UK, a new report by the organisation Compass calculates that a UBI amounting to £11,000 for a family of four could be funded by removing tax-free allowances, increasing tax rates by 3 percentage points and charging everyone the same national insurance rate.The German soul-searching on how much to support Ukraine is fascinating. Jürgen Habermas, the greatest living German theorist of democracy, has weighed in on the side of caution. Adam Tooze puts the contribution in context. And Paul Mason argues convincingly why those on the left must reject Habermas.Numbers newsUK consumer price inflation hit the highest rate in more than 40 years because of the recent jump in energy prices. It puts the country near the top of the inflation table among OECD economies. The cognitive impairment caused by severe Covid-19 is comparable to the decline that takes place between the ages of 50 and 70, according to new research. More

US companies are accelerating capital spending despite slower economic growth, as the impact of supply chain disruptions and “deglobalisation” override worries about a looming recession.A wave of recent disruptions, from coronavirus lockdowns to Russia’s invasion of Ukraine and tensions between the US and China, have led many high-profile investors and executives to predict a reversal of the decades-long trend toward sprawling global supply chains and “just in time” inventory management.Recent quarterly reports from the largest US companies provide some of the first concrete signs that companies are following through on their plans, putting pressure on their profitability just as the economic recovery begins to lose steam.With the majority of companies in the S&P 500 index having reported first-quarter results, capital expenditure across its members rose 20 per cent year on year in the first quarter, according to Bank of America data. The proportion of companies providing guidance for higher future spending than analysts had expected also rose. The trend was broad-based, with every sector except real estate increasing spending.“Onshoring or rejigging supply chain risks — that’s a costly phenomenon,” said Savita Subramanian, head of US equity and quantitative strategy at Bank of America. “Capex is usually something companies can move around or relax a bit in a constrained environment, but in this case they may have to spend more than they otherwise might.”The US economy unexpectedly contracted in the first quarter, and investors and commentators such as former Goldman Sachs chief Lloyd Blankfein have become increasingly convinced that the Federal Reserve’s efforts to fight inflation will push the economy into recession.The rising business investment is becoming a burden for some consumer-facing companies, but is also proving a boon for many of their suppliers and infrastructure providers. Shares in Walmart sank 11 per cent on Tuesday after a disappointing quarterly update that included a 60 per cent rise in capital expenditure to increase automation and strengthen its supply chain through projects such as massive high-tech distribution centres. Intel’s pledge to build a $20bn chip manufacturing site in Ohio, meanwhile, sparked celebrations from steelmakers, chemical specialists and plumbing suppliers such as FTSE 100 company Ferguson.Lourenco Goncalves, chief executive of Cleveland-Cliffs, a major steel supplier to the automobile industry, said “deglobalisation is the most important game changer of this decade in the United States”, and he was “encouraged” by Intel’s plans because a better domestic supply of semiconductors would allow carmakers to boost production. Kevin Murphy, CEO of Ferguson, in March described plans to increase US semiconductor production including Intel’s Ohio project as some of the most “exciting” examples of a broader trend toward onshoring manufacturing production.Brookfield Infrastructure Partners, one of the world’s largest investors in infrastructure from electricity lines to data centres, estimated that “re-onshoring activity and deglobalisation” would provide “hundreds of billions of dollars” of new investment opportunities. More

The writer is dean of the Paris School of International Affairs, Sciences PoThe emerging narrative from the war in Ukraine is that the surge in geopolitical risk will compound existing dissatisfaction with the global trade system and lead to fragmentation. Security will trump efficiency. Integration with like-minded partners will replace multilateralism. This narrative is neither right, nor desirable. There is no doubt that the ongoing conflict is reinforcing anti-trade prejudice. But is this a global trend? The short answer is no. There is an appetite for trade integration in many parts of the world, especially developing countries. Proof is the expansion of World Trade Organization membership, the rising number of trade agreements and the profusion of large-scale regional initiatives such as the African Continental Free Trade Area and the Regional Comprehensive Economic Partnership. Even in advanced economies, surveys consistently show positive attitudes to integration, indicating that the opposition to trade may be more concentrated in fewer sectors or regions than commonly recognised.That is not to deny that for many employees, economic conditions have worsened. But one wonders whether this is due to increased trade. If workers in Canada (or other rich countries) are doing better, even though they are vastly more exposed to trade than their US counterparts, it does not make sense to blame trade for the woes of American employees. The US has significant political levers available to improve life for American workers, and it is irresponsible not to use them.Even if the mood has turned against trade, the laws of economics have not. Trade integration guided by the logic of comparative advantage is painful and efficient; trade disintegration will be painful and inefficient. Using trade and industrial policy to achieve reshoring, or to shift demand towards domestic production in the attempt to favour workers in advanced economies, will only lower productivity growth for all. Companies will respond to the war in Ukraine by reassessing security risks and restructuring supply chains. But given the investments already made, the cost of alternatives, and factors such as wage differentials across countries, this process is likely to be gradual rather than sudden. Re-shoring or friend-shoring — confining global supply chains to allies — will require protracted government intervention, raising questions about its long-term sustainability. The targeting principle suggests trade policy is not the proper instrument to deal with inefficiencies that are not caused by trade. Markets need non-market institutions. Trade agreements should expand their scope, as they have done in recent years, to allow for provisions on competition, environment, labour, gender and other issues. This would open markets and promote improvements in domestic policies to address inefficiencies. More fundamentally, we should ask if fragmenting the trade system would ultimately help achieve non-trade goals such as environmental protection or national security. Fragmentation would make it harder for economies to undertake the huge investment needed to combat climate change. Competing systems would be likely to prioritise short-term gains over long-term environmental achievements. A fragmented trade system also lowers growth opportunities for developing countries, which will struggle to offset diminished demand from advanced economies. Restricting opportunities will only make the world more dangerous and unstable. This is not the moment to divest from the WTO — quite the opposite. The WTO system was never about liberalisation for its own sake. It was about creating predictable rules and a framework for managing disputes and spillovers. It is clear that international progress will be difficult over the next few years. Advances in digital trade may initially be made regionally. This is not a problem, as long as countries keep investing in the multilateral system. Even in this scenario, the WTO system can provide rules of conduct and crucial enforcement mechanisms. The message for the upcoming WTO ministerial meeting is that global co-operation remains vital to protect against everything from climate change to recurring pandemics. A return to 2015 is neither possible nor desirable. Some of the more hopeful assumptions of the 1990s and 2000s — that interdependence would not be weaponised, that economic convergence would foster political comity — were wrong. But we’re still better off in a world of international co-operation on corporate taxation, illicit capital flows, carbon pricing, and most importantly effective domestic policies to foster competitive markets with strong social safety nets. All these are preferable to a chaotic retreat from globalisation. More

SYDNEY (Reuters) – Whichever party takes the reins of power at Australia’s election on Saturday faces an economic road pitted with pot holes, from runaway inflation to rising interest rates, ballooning debt and an over-heated housing market.Much of this is beyond the control of any government, but the winners will still be under pressure to ease the cost-of-living crisis without stimulating yet more inflation.They will also take the blame should rates have to rise so fast that they tip the economy into recession, even if that is really the responsibility of the independent central bank.So far, the centre-left Labor opposition looks set to end the nine-year reign of the conservative Liberal National government at the May 21 vote, although a hung parliament also looms as a possibility.Labor has pledged to tackle the rising cost of living by supporting commensurate wages gains, putting pressure on Prime Minister Scott Morrison who could only promise that wages would eventually increase as unemployment came down.His argument took a body blow this week when official wage data showed annual growth of just 2.4%, less than half the 5.1% pace of consumer price inflation.Labor jumped on the figures to claim ordinary Australians were going backwards in real wages, and that at a time when the Reserve Bank of Australia (RBA) was raising borrowing costs.The RBA underlined its determination to beat inflation by lifting interest rates at a May 3 policy meeting, the first hike in 11 years and a rare step during an election campaign.Financial markets are wagering it will have to hike every month for the rest of the year, taking rates from the current lowly 0.35% to as high as 2.75% by Christmas.If right, that would be one of the most drastic tightening campaigns in modern history and a major burden for households that owe a record A$2 trillion ($1.4 trillion) in mortgage debt.It would add more than A$700 a month to an average repayment at a time when inflation is already at a two-decade peak of 5.1% and likely to reach 6% by the end of the year.DEBT, AND MORE DEBTJust the prospect of rate rises has cast a pall over the national mood. A respected survey of consumers from Westpac this month showed sentiment cratered at lows last seen in August 2020 when the coronavirus pandemic was locking down Melbourne.”The Australian household sector is one of the most indebted in the world, so they are more sensitive to changes in interest rates than at any other time,” warns Gareth Aird, chief economist at the nation’s biggest mortgage lender CBA.”This elevated level of household indebtedness means that the RBA must thread the rate hike needle carefully.”Adding insult to injury, rising borrowing costs also threaten to upend the housing market which boasted its strongest year ever in 2021 as values surged 25% across the nation.Prices have already started to slip in Sydney and Melbourne and the RBA itself has estimated values could fall by 10-15% should mortgage rates rise by 200 basis points.The public sector has debt problems of its own having run up record budget deficits through the pandemic and a gross debt pile of A$900 billion.Another A$185 billion of red ink is projected out to June 2025, when the term of the new government ends, and it will all carry higher borrowing costs as bond yields soar.A year ago the government could borrow for three years at zero percent. It now costs around 3%.Yet both major parties have committed to more spending, not less, and to radical cuts in income taxes due from mid-2024 that are estimated to cost A$184 billion by 2031.Many economists argue this simply cannot be afforded given added spending on health, defence and climate change mitigation. How the winner this weekend settles this vexed issue, could well decide the next election.($1 = 1.4259 Australian dollars) More

TOKYO (Reuters) – More than 60% of Japanese companies want the central bank to end its policy of massive monetary easing this fiscal year due to pain from the weak yen, with roughly a quarter calling for it to take action now, a Reuters survey shows.Less than a year ago, Japan Inc had enthusiastically backed the Bank of Japan’s policy but this year’s rapid slide in the yen to a two-decade low has jacked up prices of fuel and raw materials imports, lifting not only corporate costs but also hitting household spending.This month the yen hit a fresh low of 131.34 to the dollar, a 14% decline since the start of the year.”Any weakening of the yen beyond 125 to the dollar is excessive and policymakers should take action in some way, including – but not limited to – hiking rates,” one manager at a chemicals maker wrote in the monthly Reuters Corporate Survey.Twenty-four percent of respondents said the central bank should abandon large-scale monetary stimulus now, while 23% said by the end of the first half in September.All in all, 64% want large-scale stimulus gone by March when the fiscal year ends and that number jumps to 84% for April when BOJ Governor Haruhiko Kuroda serves out his term.While Kuroda has said the yen’s moves have been rapid, he argues that a weak yen on the whole benefits the economy. In stark contrast to shifts to interest hikes in other parts of the world, Kuroda has also said the central bank will continue with monetary powerful easing given the impact of the pandemic and tepid inflation. Of those respondents keen to see a change in BOJ policy, 58% want to see negative rates scrapped, 35% want interest rates hiked and 25% are eager to see the bank drop or change its 2% inflation target. Multiple answers were allowed for this question. The results of the April 26-May 13 poll of 500 large and midsize non-financial firms, which saw 230 firms respond, represent a major U-turn from July when the survey last asked comparable questions about monetary policy.At that time, 72% of Japanese firms saw a positive impact from BOJ policy with a majority saying ultra-low rates should continue for another 3-4 years.The sharpness of the currency’s decline has outweighed the benefits normally associated with a weaker yen, namely the inflation of profits earned abroad when repatriated and longer term the ability to export more cheaply. Japanese exporters have also continued to shift production abroad.”As the production shift continues, the impact on the economy from higher raw materials costs and other imports from the weaker yen is greater than the apparent increase in profits for exporters,” said one manager at a retailer.Respondents reply to the survey on condition of anonymity.BOJ SLAMMEDSome managers were withering in their criticism of BOJ policy, expressing concern the weak yen could ultimately erode Japan’s economic might. “The easing policy has turned out to be nothing but a stupid plan that weakens national power,” one manager at a services firm wrote. The survey also found firms wary of boosting capital spending due to the impact of the weak yen and rising input costs. Almost a half of them plan to keep business investment flat this fiscal year while another 14% expect it to decline.The survey also showed that China’s anti-COVID measures – including a lockdown in Shanghai – have hurt nearly two-thirds of Japanese firms. Ten percent said they were suffering a “big impact” on business.”Imports of China-produced car parts have stopped, putting downward pressure on car output,” a chemicals maker manager wrote.($1 = 129.02 yen) More

As Canon kicked off Japan’s corporate earnings season in late April with an upgrade to its annual profit guidance, chief executive Fujio Mitarai welcomed the yen’s sharp decline as “a big plus” for the printer maker. Canon has been one of the biggest beneficiaries as the Japanese currency fell through ¥130 against the dollar just days before its results came out. The yen’s tumble has made it cheaper to export the office equipment it makes in Japan while boosting profits earned overseas.Other big Japanese export names such as Sony, Toyota and Nintendo have done even better, churning out record profits despite Covid-19 disruptions. But what was long a blessing for corporate Japan is suddenly turning into a threat as the yen’s spectacular fall to a multi-decade low coincides with a surge in commodity prices sparked by Russia’s invasion of Ukraine.The Japan Iron and Steel Federation has warned that the yen’s fall presents “a risk for Japan’s manufacturers for the first time”. Noting that companies import raw materials to make and sell products in Japan, Tadashi Yanai, outspoken chief executive of Uniqlo owner Fast Retailing, has declared that “the weak yen has no merit whatsoever”.That is not quite the case. Bank of Japan governor Haruhiko Kuroda argues that a weak yen remains broadly positive for the Japanese economy despite the difficulties it causes, particularly for smaller businesses dependent on imports of fuel and raw materials.But even for large exporters, the benefits of a weaker yen have waned compared with a decade ago, when businesses warmly welcomed then-prime minister Shinzo Abe’s efforts to drive the currency lower through aggressive monetary easing.Tokyo headquarters of Sony. The company has reported record profits, helped by a weak yen © Kimimasa Mayama/EPA-EFE/Shutterstock“Before Abenomics, the yen was too strong so the move from ¥80 to ¥110 was welcomed. And a weak yen was convenient to resolve deflation,” said Kazuo Momma, executive economist at Mizuho Research Institute.Japanese carmakers and other manufacturers have shifted production overseas to reduce their exposure to currency volatility since being punished by a strong yen in the wake of the global financial crisis in 2008. The ratio of overseas production among Japanese manufacturers rose to an estimated 22 per cent in the last fiscal year from 17 per cent in fiscal 2007, according to cabinet office data.“If somebody tells me that ¥130 [against the dollar] is good news for you, I will say it’s not good news and it’s not bad news because . . . we have plants all over the world,” Ashwani Gupta, Nissan’s chief operating officer, said in an interview. “I think we will say that anything between ¥116 and ¥122 makes our operations the most effective globally.”The common use of hedges to protect against swings in foreign exchange rates also means Japanese companies cannot cut export prices immediately in line with a weakening of the yen. Moritaka Yoshida, president of Toyota supplier Aisin, said responding was even trickier when the currency moves as dramatically as when the yen dropped from ¥114 against the dollar in early March to ¥130 by the end of April. Another critical difference from the Abenomics era is the inflationary pressure now squeezing households. The yen’s fall has accelerated the global rise in commodity prices, making everything from petrol to bread and vegetables more expensive since Japan is a net importer of oil and food. For Toyota, “an unprecedented” rise in raw material and logistics costs will wipe ¥1.45tn ($11bn) from its operating profits for the fiscal year through to March 2024, far outweighing ¥195bn in currency-related gains. Even considering the group’s conservative exchange rate forecast of ¥115 to the dollar, compared with ¥128 on Wednesday, its costs from climbing steel and aluminium prices are unlikely to be offset by a weaker yen.

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Toyota produces a third of its cars in Japan, compared with less than 20 per cent for Nissan and Honda. That makes it a bigger beneficiary of the weaker yen, but analysts said Japan’s largest carmaker was at a disadvantage to global rivals when it came to passing on the higher cost of raw materials to consumers.“Raising prices for finished products is not widespread in Japan,” said Takaki Nakanishi, an automotive analyst. “It is relatively easier for those that produce overseas to raise product prices to address the increase in costs during the production process.” The chip shortage and other supply constraints have also prevented companies from increasing production from their plants. That has reduced the trickle-down effect of the weaker yen, which comes when companies lower in the supply chain benefit as export giants invest in factories at home to expand capacity.

“The future has become uncertain due to the Ukraine crisis,” said Wakaba Kobayashi, economist at Daiwa Institute of Research. “So while exporters are benefiting from the weak yen, they remain hesitant to make capital investments.”Still, longtime Japan watchers such as Nissan’s Gupta are convinced the weaker yen will be good for the economy as a whole if it can eventually help achieve the government’s long-stated goal of sustained domestically generated inflation.“We are seeing Japan graduating from deflation. This is great news,” Gupta said. “Of course it was driven more by the cost side, but I think we’re getting into a cycle when it will be pulled by the people.”Additional reporting by Antoni Slodkowski More