Production Data Challenges PM Abe’s Growth Strategy

Weak industrial production data from Japan today raises concern that the world’s third-largest economy may be back in recession, challenging Prime Minister Shinzo Abe’s growth strategy.

Output, a key component of the Coincident Index (JNCICCOI) that’s used by the Cabinet Office to determine peaks and troughs in the business cycle, unexpectedly fell in August. It’s now dropped in three of the five months since an increase in the sales tax in April.

Abe’s administration is “almost certain” to downgrade its assessment of the economy from “standstill” to “change of phase” when the August figure for the gauge is released next week, said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute in Tokyo. This indicates a high probability of being in recession, according to the Cabinet Office’s own guidance on the index.


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