Ja­pan fac­tory out­put dis­ap­points in July

The Myanmar Times - - International Business -

JA­PAN’S fac­tory out­put stag­nated in July from the pre­vi­ous month, data showed yes­ter­day in a fur­ther blow to the world’s third-largest econ­omy.

The lack­lus­tre re­sult came af­ter a se­ries of dis­ap­point­ing data, which raised a red flag for an econ­omy that stalled in the sec­ond quar­ter.

A drop in house­hold spend­ing, weak ex­ports, and dis­ap­point­ing in­fla­tion fig­ures have dealt a blow to Ja­pan’s war on de­fla­tion, which will heap fresh pres­sure on the Bank of Ja­pan to un­leash an­other wave of growth-boost­ing stim­u­lus.

In­dus­trial pro­duc­tion showed no growth in July, ac­cord­ing to the Ministry of Econ­omy, af­ter an ex­pan­sion of 2.3 per­cent in June.

Ship­ments, mean­while, in­creased 0.9pc, the ministry said, a slower pace than the 1.7pc ex­pan­sion recorded the pre­vi­ous month.

Ja­pan reg­is­tered zero growth in the April-June quar­ter, as weak de­mand over­seas and a fall in busi­ness spend­ing dented ac­tiv­ity.

Those worse-than-ex­pected fig­ures ag­gra­vated doubts among many econ­o­mists as they in­creas­ingly write off Prime Min­is­ter Shinzo Abe’s bid to fire up growth, dubbed Abe­nomics.

His plan – a mix of mas­sive mon­e­tary eas­ing, gov­ern­ment spend­ing and red-tape slash­ing – ini­tially brought the yen down from record highs, set­ting off a stock mar­ket rally and boost­ing cor­po­rate prof­its.

But it has stum­bled more than three years af­ter it was un­veiled, and Ja­pan’s ma­jor ex­porters have seen their bot­tom line dented by the sharp re­ver­sal in the cur­rency.

A strong yen makes them less com­pet­i­tive over­seas and shrinks the value of repa­tri­ated prof­its.

Many of the county’s best-known firms, in­clud­ing Sony and Toy­ota, re­ported lower prof­its in the three months to June ow­ing to the cur­rency’s rally.

The fo­cus will now turn to the Bank of Ja­pan, which dis­ap­pointed mar­kets at its late July meet­ing by leav­ing its 80 tril­lion yen (US$783 bil­lion) an­nual bond-buy­ing pro­gram – a cor­ner­stone of Abe­nomics – un­changed.

The BoJ holds its next meet­ing in late Septem­ber. –

Photo: AFP

Prime Min­is­ter Shinzo Abe speaks in Nairobi on Au­gust 28.

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