Fears that Japan’s recovery is heading for further slowdown deepened yesterday as data showed the nation’s trade with the world rose only slightly and a corporate spending indicator fell in October.
The health of the trade-reliant economy continues to draw concern as exports, its main engine for growth, slow because of a strong yen and waning overseas demand while domestic demand remains soft.
Japan’s economic fiscal policy minister Banri Kaieda told reporters yesterday that he expected growth to be “substantially lower” in the fourth quarter.
PHOTO: REUTERS
The current account surplus — the broadest measure of trade with the rest of the world — widened 2.9 percent in October from a year earlier to ¥1.44 trillion (US$17.20 billion), missing expectations of a 7 percent rise.
In September the surplus rose 24.3 percent.
Other data from the finance ministry showed core private-sector machinery orders, a leading indicator of corporate capital spending, fell 1.4 percent in October from the previous month, the second consecutive decline after a 10.3 percent fall in September.
PHOTO: REUTERS
The data also missed expectations of a 0.1 percent decline.
Yesterday’s data illustrated that the double whammy of the expiration of government subsides for automobiles and other goods and slowing US, European and Chinese demand continued to threaten Japan’s economy, analysts said.
“The next couple of quarters are likely to be tough for Japan, as expiring incentives for purchases of consumer durables hurt demand,” Richard Jerram of Macquarie Bank said. “Stalling exports and a soft industrial cycle will erode corporate profitability and damage the manufacturing investment cycle.”
However, Jerram said that robust Japanese machinery export orders indicated an acceleration of economic activity in the region and may help soften the blow for Japan.
“If exports can show some modest growth then Japan should be able to avoid recession,” he said.
Recent data showed October exports grew at their slowest pace of the year after the yen traded at 15-year highs against the dollar, hammering the competitiveness of the crucial sector.
CHINA
Separately, a Chinese government think tank has warned inflationary pressures are building in the economy and consumer prices will remain “relatively high” next year, amid growing expectations of a rate hike.
The Chinese Academy of Social Sciences (CASS) also cautioned that the world’s second-largest economy was at risk of overheating next year “if the growth speed is not controlled properly,” Xinhua news agency said yesterday.
The report came as Beijing brought forward the release of key economic data for last month to Saturday from Monday, fueling speculation that policymakers were planning to raise interest rates in the coming days.
“The inflationary pressure is building up and excess liquidity would be the major factor driving the CPI [consumer price index] up in the next several years,” CASS said in its 2011 Economic Blue Paper.
The think tank forecast consumer prices to rise 3.2 percent over the entire year this year — above the government’s full-year target for three percent — and 3.3 percent next year.
“Surging grain prices in the international market and the rising cost of growing grains in China would keep the prices of consumer goods at a relatively high level,” the report said.
Prices for manufactured goods were also expected to rise next year.
China’s consumer price index rose 4.4 percent year-on-year in October — the fastest pace in more than two years — with the prices of 18 types of vegetable increasing more than 60 percent.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to