The Bank of Japan (BOJ) is expected to downgrade its economic growth forecast for this fiscal year as supply constraints caused by Asian factory shutdowns cripple output and exports, sources said.
The BOJ is also likely to trim its consumer inflation forecast for the year ending in March, five sources said, which would reinforce market expectations that it will lag behind other central banks in whittling down crisis-mode stimulus measures.
The revisions would highlight the fragile state of Japan’s recovery as rising import costs and supply bottlenecks hit firms, casting doubt on the central bank’s view that strength in manufacturing profits would offset weak consumption.
Photo: Reuters
“Upcoming data will likely show a pretty big plunge in Japanese exports and output due to factory shutdowns in Asia. That will clearly push down economic growth,” said one of the sources, who spoke on condition of anonymity.
“Japan’s recovery isn’t derailed, but the timing of a clear rebound may have been delayed,” another source said.
The revisions are to be part of the BOJ’s quarterly growth and price forecasts due at its next policy meeting from Oct. 27 to 28.
While global demand remains firm, analysts expect Japan’s exports to weaken in coming months as parts shortages and factory shutdowns in Asia caused by the pandemic disrupt production for manufacturers like Toyota Motor Corp.
“We must be vigilant to the impact of supply constraints caused by supply chain disruptions in Asia,” BOJ Deputy Governor Masayoshi Amamiya said yesterday, pointing to uncertainties over the economic outlook.
BOJ policymakers are counting on an expected rebound in consumption after the government’s decision to lift state of emergency curbs on Sept. 30, but there is uncertainty on when and to what extent pent-up demand would begin to prop up growth.
Such uncertainty could force the BOJ to offer a bleaker view on the economy at this month’s meeting than the current assessment that it is “picking up as a trend,” the sources said.
After slumping 4.4 percent in the year that ended in March, Japan’s economy has been emerging from the doldrums as solid global demand moderated the hit to consumption from COVID-19 curbs.
Under current projections made in July, the BOJ expects the economy to expand 3.8 percent this fiscal year and rise 2.7 percent in the next.
That compared with forecasts of a 3.2 percent rise in fiscal 2021 and a 2.8 percent gain next year in a Reuters poll.
The central bank expects core consumer prices, which fell 0.4 percent in the previous fiscal year, to rise 0.6 percent in the current year and increase 0.9 percent in the next.
Analysts polled by Reuters expect core consumer inflation to be flat in fiscal 2021 and rise 0.5 percent in fiscal 2022.
After several years flying high as Asia’s best Nvidia Corp proxy, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is increasingly vying with other artificial intelligence (AI) stocks for investor attention. Stock traders are chasing a wider array of beneficiaries as mainstream usage of AI creates demand for hardware beyond the most-advanced chips TSMC makes for Nvidia. Subthemes from the deepening memory crunch to advances in robotics are also luring bids. At the same time, investment caps on single stocks are pushing funds to diversify, while retail investors long familiar with TSMC through its US depositary receipts are being offered a broader set of
UNDER MICROSCOPE: Taiwan detained three people who allegedly conspired to buy servers in Taiwan and export them using fraudulent documentation, prosecutors said Nvidia Corp chief executive officer Jensen Huang (黃仁勳) on Saturday urged Super Micro Computer Inc to tighten up on compliance after Taiwan detained three people this week for allegedly making fraudulent declarations about artificial intelligence (AI) servers made by its US partner. The development marked the nation’s first crackdown on semiconductor smuggling, which grew after the US slapped restrictions on exports of high-end chips such as Nvidia AI accelerators to China. Nvidia is “rigorous” in explaining regulations to all of its partners, Huang told reporters after arriving in Taipei. “Ultimately Super Micro has to run their own company,” he said in response to
Netherlands-based semiconductor equipment supplier ASML Holding NV yesterday said that it is planning to hire an additional 1,000 people in Taiwan this year in response to growing demand from clients. ASML had previously planned to recruit 600 people this year, but that the plan has been adjusted upward, ASML vice president and ASML Taiwan general manager Grace Wang (汪佳慧) told reporters. ASML has a workforce of more than 4,500 in Taiwan, accounting for about 10 percent of its global total, Wang said. This year’s recruitment campaign would focus on adding people in the customer support, manufacturing and supply chain domains to assist ASML
TECH RELIANCE: Growth is increasingly reflecting an unequal K-shaped distribution, where technology sectors outperform and other industries struggle, an expert said Standard Chartered Bank has significantly raised its forecast for Taiwan’s economic growth to 9.5 percent this year, up from 7.6 percent previously, citing surging artificial intelligence (AI) demand driving exports, semiconductor production and investment. The upgrade reflects a sustained AI supercycle that continues to fuel demand for advanced chips and technology infrastructure, which form the backbone of Taiwan’s exports, the bank said in a report this week. “We raise our 2026 growth forecast to reflect a much stronger-than-expected first-quarter GDP figure,” Standard Chartered senior economist for greater China and Asia Tommy Wu (胡東安) said in the report. Driven largely by a 35.3 percent
RSS