Rising Bitcoin Could Boost Japanese GDP, Analysts Say

The rise in the value of bitcoin could have a knock-on positive impact on Japanese GDP growth, according to findings released today by local analysts.

Financial holdings giant Nomura today spoke to the “wealth effect” of bitcoin, suggesting that the significant gains in bitcoin price over the last number of months could result in an increase in Japan’s GDP by as much as 0.3 percent.

In an interview with Bloomberg, Nomura analysts Kazuki Miyamoto and Yoshiyuki Suimon made their prediction, speculating on the potential scale of the knock-on impact to consumer spending.

According to their findings, the gains in bitcoin markets could be worth as much as 23 billion to 96 billion yen extra in retail sales — equivalent to up to $850 million US.

A note from Yoshiyuki Suimon’s team of analysts detailed the findings, and set out the predictions for an economic boost in the fourth quarter of 2017 and the first quarter of 2018.

“Moreover, the fact that the rise in bitcoin prices was concentrated in 2017 Q4 could result in the wealth effect materializing in 2018 Q1, and if that is the case, we estimate a potential boost to real GDP growth on an annualized quarter-on-quarter basis of up to about 0.3 percentage points.

“Although Japanese investors’ unrealized gains are unlikely to feed straight through to their patterns of consumption, it is common knowledge that personal consumption is bolstered as a result of increases in the value of asset holdings.”

The team also acknowledged in its report comments from Haruhiko Kuroda, governor of the Bank of Japan, who said the bank believed the rise in price in bitcoin markets was a product of pure speculation.

After strong rallies into December, bitcoin markets began to cool over the final few days of 2017, down from highs of nearly $20,000. At the time of writing, prices had begun to recover, with some analysts suggesting a new bull run could already be underway in the bitcoin markets.

With the potential knock-on GDP effect of rising bitcoin values now detailed, analysts will now be hoping for continued upward pressure to fuel further economic growth.