Japan’s factory output plummeted last month at its sharpest pace since the aftermath of the 2011 earthquake and tsunami disaster, government data showed yesterday.
This casts a shadow over economic growth in the first three months of the year, putting the world’s third-biggest economy at risk of contraction. GDP contracted 0.3 percent in the final quarter of last year, revised data showed earlier this month.
Japan’s Ministry of Economy, Trade and Industry said that industrial production fell 6.2 percent from the previous month, worse than a Bloomberg forecast of a 5.9 percent drop. It was also the sharpest since a 16.5 percent fall in March 2011.
Analysts said last month’s result was hit by temporary factors, including factory closures by top global automaker Toyota Motor Corp and falling demand related to China’s Lunar New Year holiday.
IHS Global Insight economist Harumi Taguchi said that the outlook remained weak because of “relatively high inventories” in factory warehouses.
“Weak demand and destocking could weigh on production over the near term,” Taguchi said.
The reading follows a flurry of grim economic data, including consumer inflation at zero last month, for the second straight month.
The result highlights the challenge Japanese Prime Minister Shinzo Abe faces in pushing prices higher as energy prices fall and a higher yen drives down the cost of other imports.
Also weighing on the economy are government plans to further raise Japan’s consumption tax from the current 8 percent to 10 percent next year, in a bid to cope with a snowballing national debt as the population declines.
After approving a record budget of ￥96.7 trillion (US$860 billion) on Tuesday, Abe reiterated he would go ahead with plans to raise the sales tax even as influential economists, including Nobel Prize winner Joseph Stiglitz, call for a delay.
Abe yesterday said he was considering a new economic stimulus package ahead of elections this summer, public broadcaster NHK reported.
Abe made the remarks to Natsuo Yamaguchi, head of junior coalition partner Komeito, NHK said, without saying where it got the information.
Yamaguchi was quoted as saying that Komeito was ready to respond if, as speculated by some local media, Abe were to call a snap lower house election this summer to coincide with a poll in the less-powerful upper chamber.
The situation is reminiscent of late 2014, when —amid similar speculation — Abe called a snap general election and postponed a planned sales-tax increase after repeatedly denying he would.
Additional reporting by Bloomberg
CHIP HANG-UP: Surging memorychip prices would deal a blow to smartphone sales this year, potentially hindering one of MediaTek’s biggest sources of revenue MediaTek Inc (聯發科), the world’s biggest smartphone chip designer, yesterday said its new artificial intelligence (AI) chips used in data centers are to account for 20 percent of its total revenue next year, as cloud service providers race to deploy AI infrastructure to meet voracious demand. MediaTek is believed to be developing tensor processing units for Google, which are used in AI applications. While it did not confirm such reports, MediaTek said its new application-specific IC (ASIC) business would be a new growth engine for the company. It again hiked its forecast for the addressable ASIC market to US$70 billion by 2028, compared
MediaTek Inc (聯發科), the world’s biggest smartphone chip supplier, yesterday said it plans to double investment in data center-related technologies, including advanced packaging and high-speed interconnect technologies, to broaden the new business’ customer and service portfolios. The chip designer is redirecting its resources to data centers, mainly designing application-specific integrated circuits (ASIC) with artificial intelligence (AI) capabilities for cloud service providers. The data center business is forecast to lead growth in the next three years and become the company’s second-biggest revenue source, replacing chips used in smart devices, MediaTek president Joe Chen (陳冠州) told a media event in Taipei. “Three or four years
Motorists ride past a mural along a street in Varanasi, India, yesterday.
Until US President Donald Trump’s return a year ago, when the EU talked about cutting economic dependency on foreign powers — it was understood to mean China, but now Brussels has US tech in its sights. As Trump ramps up his threats — from strong-arming Europe on trade to pushing to seize Greenland — concern has grown that the unpredictable leader could, should he so wish, plunge the bloc into digital darkness. Since Trump’s Greenland climbdown, top officials have stepped up warnings that the EU is dangerously exposed to geopolitical shocks and must work toward strategic independence — in defense, energy and
RSS