Japan’s industrial output has likely rebounded in March from February’s major decline, according to Societe Generale. Industrial output is expected to have grown 3.7% after falling 5.7% in February. February’s fall was due to certain issues over parts supply due to closedown of transport equipment factories. According to the Ministry’s overall assessment of production, “industrial production fluctuates indecisively”.
Strong exports, consumption and production have averted an economic downturn, noted Societe Generale. But, the economy has stagnated and has not been able to regain strength. According to government’s assessments, production, exports and consumption also continue to be “flat”. If this persists, the GDP growth rate might also continue to be around 0%, added Societe Generale. The Japanese economy requires expanding above the potential growth rate in order for ‘Abenomics’ to be a success.
Moreover, the supply of equipment parts might get impacted due to the earthquake in the Kumamoto area. This indicates that production might stall again. Hence, it is likely to be difficult for production to grow at 5.3% m/m, said Societe Generale.
The material has been provided by InstaForex Company – www.instaforex.com