Japan’s industrial production is expected to have stagnated temporarily in October; however it is moving towards recovery on a trend. According to a Societe Generale research report, industrial output of Japan is likely to have grown 0.1 percent in sequential terms in October. Until the first quarter of 2016, Japan’s industrial production was on a downtrend; however, it grew 0.2 percent and 1.3 percent on sequential basis in the second quarter and third quarter of this year, respectively. There has been an upward shift in the momentum. Industrial production is expected to have stayed flat in October as producers continue to be worried regarding rising inventory, even if the trend towards a rebound is beginning to show. The Ministry of Economy, Trade and Industry (METI) survey of production projections for November continues to stay strong at 2.1 percent month-on-month. The fact that real exports have expanded for two straight quarters is expected to be the reason for the rebound in industrial production. Given the recovery in automobile exports, Japan’s exports to developed nations are improving. But capital goods exports continue to be suppressed because of stagnation in the emerging economies that is depressing total exports, noted Societe Generale. Given that the impacts of a deceleration in the emerging markets and the yen appreciating remaining, the rebound in exports is expected to be rather modest. But as economies come over the uncertainties next year in the global economy and markets via policy actions by each country, the resilient growth in the developed nations should have a positive impact by assisting the emerging markets escape their stagnation, stated Societe Generale.
Source: EconoTimes