Japan Cuts Own Assessment as Industrial Output Declines

The government downgraded its assessment of the Japanese economy Tuesday for the first time in 10 months in its August monthly report, as a decelerating global economy weighed on the country’s exports and industrial production.

“Some weak movements have been seen recently,” the Cabinet Office said in the report. In July, the office said that “difficulties continue to prevail.”

“The Japanese economy is on a path to recovery at a moderate pace partly due to reconstruction demand” related to the massive earthquake and tsunami that struck northeastern Japan in March 2011, the August report said.

However, it said that a further slowdown of overseas economies amid uncertainties about the prospects for the eurozone debt crisis is a downside risk for the Japanese economy.

The risk of electricity supply constraints in the face of the prolonged halt of most nuclear reactors in Japan following the Fukushima nuclear accident as well as the adverse effects of chronic deflation are also worrying factors, it added.

On exports, the government cut its assessment for the first time in seven months, saying that exports are showing “a weak tone,” reflecting a slowdown of exports to Asia including China and the United States.

Economic and fiscal policy minister Motohisa Furukawa said at a press conference, “On the front of domestic demand, a recovery trend continues to strengthen, but the speed (for the overall recovery) is decelerating a bit due to overseas demand-related factors that acted as a brake.”

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza