China tensions to cut Japan's GDP growth by 0.2 pc: Goldman Sachs

Japan's gross domestic product growth may be dragged down by 0.2 percentage points, as escalating tensions with China weigh on its tourism and export sectors, according to Goldman Sachs.  

The analysis uses the 2016-17 THAAD missile defense system fallout with South Korea as a model, as well as the potential duration of the current Sino-Japanese tensions, to gauge the calculations.

The firm predicted that a 50 percent drop in tourists from mainland China and Hong Kong would slash GDP growth by 0.2 percentage points. 

Although an increase in visitors from other regions would partially offset this, it forecast a net impact of a 0.1 percentage point reduction.

Goldman Sachs projected that restrictions on Japanese consumer goods exports would shave 0.1 percentage points off the country’s economic growth. 

The firm warned that the impact could be several times greater if these curbs were to expand to non-consumer goods. 

Furthermore, the economic blow would be significantly magnified if China also moves to restrict rare earth supplies.