Manufacturing bottlenecks may be easing

The economic recovery stalled last quarter as the services sector was held back by virus restrictions and manufacturers suffered from chip shortages. However, with daily jabs now above the government's 1mn target and chip supply ramping up, activity is set for a strong rebound in the second half of the year.
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
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Japan Economics Weekly

Kishida dissolves parliament, firms look to seniors

The ruling LDP appears to be bracing for a slimming down of its lower house majority in the general election that will take place on 31st October. That would make tangible structural reform progress under PM Kishida even less likely. And while a large fiscal stimulus package will be compiled immediately after the election, it’s likely to sustain the elevated fiscal support of the past year rather than act as a fresh driver of growth. Meanwhile, firms appear to be readying themselves for renewed labour shortages once the economy reopens by drawing up plans to re-employ more seniors. We expect further increases in over-60s employment to drive labour force participation higher over the next few years.

15 October 2021

Japan Data Response

Japan Machinery Orders (Aug. 2021)

The fall in machinery orders in August supports our view that the recovery in business investment stalled a little across Q3. But private investment should rebound more strongly in Q4 and into next year provided vaccines allow economic activity to return to somewhere near normal.

13 October 2021

Japan Economics Update

Why is inflation still so low in Japan?

The continued weakness in Japan’s inflation is partly due to the recent plunge in mobile phone tariffs and the long lags between global energy prices and household utility bills. Indeed, inflation is set to rise next year. But more muted cost pressures in manufacturing than in other advanced economies coupled with the reluctance of Japanese firms to raise output prices mean that inflation won’t surge as it has elsewhere.

12 October 2021

More from Marcel Thieliant

Japan Economic Outlook

Faster vaccine campaign allows rapid rebound

Japan’s lagging vaccine rollout has finally reached cruising speed, which should allow a rapid recovery in activity over the second half of the year. The labour market may soon be as tight as it was before the pandemic, but we expect this year’s jump in inflation to be short-lived. As such, the Bank of Japan will keep policy loose for the foreseeable future.

7 July 2021

Australia & New Zealand Economics Update

RBA to hike rates in early-2023

By tapering its bond purchases and watering down its commitment to keep its policy rate unchanged until 2024, the RBA is paving the way for interest rate hikes in 2023.

6 July 2021

Australia & New Zealand Data Response

Australia International Trade (May 2021)

While export values hit a record high in May, this was largely driven by soaring export prices and export volumes probably dropped back. However, we think that the drag from net trade on GDP growth will fade before long as import volumes come off the boil.

1 July 2021
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