Japan’s economic outlook darkened further yesterday as a bleak snapshot of business investment and a renewed threat of deflation stoked fears that the recession was far from over.
The government said machinery orders, a closely watched gauge of corporate spending on factories and equipment, fell for a fourth straight month, marking the longest such streak on record.
It said there was no sign of a recovery in the orders, which fell 3.2 percent in January from the previous month as exports collapsed.
“Honestly, this month’s result is so bad,” a government official told reporters. “We couldn’t find any positive factors anywhere.”
CAR INDUSTRY
Orders from the car industry fell 36.2 percent, while overseas orders plunged 49 percent — both unprecedented drops.
“We believe capital expenditure will continuously decrease this year,” RBS Securities economist Junko Nishioka said.
Investors managed to look beyond the latest raft of poor data. The Nikkei stock index soared 4.55 percent, rebounding from a more than 26-year low after a powerful rally on Wall Street.
Japan’s corporate sector was a key driver of a recovery in Asia’s largest economy following the 1990s recessions, when companies enjoyed strong profits and invested heavily to expand their production facilities.
But the global downturn has caused demand for Japanese goods to dry up, prompting companies such as Toyota and Sony to shed thousands of jobs.
Japan’s exports almost halved in January from a year earlier as factory output plummeted 10 percent month-on-month.
“Turmoil in the global financial markets in September-October last year paralyzed trade finance globally, which depressed production [and] orders at epic proportions,” Morgan Stanley economist Takehiro Sato wrote in a note.
DEFLATION FEARS
Fears of a return to deflation mounted as the central bank announced that wholesale prices fell 1.1 percent last year from a year earlier, the sharpest fall in almost six years.
Japan was plagued by a deflationary spiral for years after its asset price bubble burst in the early 1990s, deterring consumers from spending and reducing corporate profits.
Inflation soared last year on the back of higher oil and material costs, but has since evaporated as energy prices cooled and domestic demand weakened.
Japan’s economy has been battered by a worldwide drop in demand for cars, high-tech goods and machinery, putting it on course for its deepest recession since World War II.
The economy contracted 12.7 percent on an annualized basis in the final quarter of last year, the worst performance in almost 35 years, the government said last month. There are concerns that the figure might be revised today to show an even bigger decline.
WAITING GAME: The US has so far only offered a ‘best rate tariff,’ which officials assume is about 15 percent, the same as Japan, a person familiar with the matter said Taiwan and the US have completed “technical consultations” regarding tariffs and a finalized rate is expected to be released soon, Executive Yuan spokeswoman Michelle Lee (李慧芝) told a news conference yesterday, as a 90-day pause on US President Donald Trump’s “reciprocal” tariffs is set to expire today. The two countries have reached a “certain degree of consensus” on issues such as tariffs, nontariff trade barriers, trade facilitation, supply chain resilience and economic security, Lee said. They also discussed opportunities for cooperation, investment and procurement, she said. A joint statement is still being negotiated and would be released once the US government has made
‘CRUDE’: The potential countermeasure is in response to South Africa renaming Taiwan’s representative offices and the insistence that it move out of Pretoria Taiwan is considering banning exports of semiconductors to South Africa after the latter unilaterally downgraded and changed the names of Taiwan’s two representative offices, the Ministry of Foreign Affairs (MOFA) said yesterday. On Monday last week, the South African Department of International Relations and Cooperation unilaterally released a statement saying that, as of April 1, the Taipei Liaison Offices in Pretoria and Cape Town had been renamed the “Taipei Commercial Office in Johannesburg” and the “Taipei Commercial Office in Cape Town.” Citing UN General Assembly Resolution 2758, it said that South Africa “recognizes the People’s Republic of China (PRC) as the sole
NEW GEAR: On top of the new Tien Kung IV air defense missiles, the military is expected to place orders for a new combat vehicle next year for delivery in 2028 Mass production of Tien Kung IV (Sky Bow IV) missiles is expected to start next year, with plans to order 122 pods, the Ministry of National Defense’s (MND) latest list of regulated military material showed. The document said that the armed forces would obtain 46 pods of the air defense missiles next year and 76 pods the year after that. The Tien Kung IV is designed to intercept cruise missiles and ballistic missiles to an altitude of 70km, compared with the 60km maximum altitude achieved by the Missile Segment Enhancement variant of PAC-3 systems. A defense source said yesterday that the number of
Taiwanese exports to the US are to be subject to a 20 percent tariff starting on Thursday next week, according to an executive order signed by US President Donald Trump yesterday. The 20 percent levy was the same as the tariffs imposed on Vietnam, Sri Lanka and Bangladesh by Trump. It was higher than the tariffs imposed on Japan, South Korea and the EU (15 percent), as well as those on the Philippines (19 percent). A Taiwan official with knowledge of the matter said it is a "phased" tariff rate, and negotiations would continue. "Once negotiations conclude, Taiwan will obtain a better
RSS