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Supply shortages set to hold back manufacturers

Production of motor vehicles and electronics fell sharply in August and is well below pre-pandemic levels. This isn’t mainly due to weaker demand, which has moderated but remains healthy. Instead, it seems to be driven by mounting material shortages. Those shortages will probably persist for a while yet, posing a downside risk to our upbeat forecasts for 2022 GDP growth.
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
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Japan Economics Weekly

Respite for BoJ doesn’t weaken case for a policy tweak

Pressure on the Bank of Japan’s Yield Curve Control framework eased this week. On the campaign trail for the Upper House election, where inflation has emerged as a key concern, Prime Minister Kishida said that monetary tightening would do more harm than good. Even more welcome for the BoJ, pressure emanating from the bond market has dropped back too. It had to buy less than a tenth as many JGBs this week as last. Some might feel that this reduces the need to shore up the policy framework. But a respite provides a window in which to make it more resilient.
Asia Drop-In (30th June, 09:00 BST/16:00 SGT): Are Asia’s central banks behind the curve? Can the Bank of Japan and People’s Bank of China continue to go against the grain? Find out in our special session on what global monetary tightening looks like in Asia. Register now.  

24 June 2022

Japan Data Response

Japan Consumer Prices (May 2022)

While inflation didn’t rise any further in May, it will remain above the BoJ’s 2% target until early-2023, while underlying inflation will approach 2%. However, the Bank won’t respond with tighter policy. Asia Drop-In (30th June, 09:00 BST/16:00 SGT): Are Asia’s central banks behind the curve? Can the Bank of Japan and People’s Bank of China continue to go against the grain? Find out in our special session on what global monetary tightening looks like in Asia. Register now.  

24 June 2022

Japan Data Response

Japan Flash PMIs (Jun. 2022)

The PMIs suggest that supply shortages are still holding back manufacturing output and adding to price pressures. On a more upbeat note, the surveys also point to a strong pick-up in consumption as the economy rebounds from the Omicron wave and international tourists return. Asia Drop-In (30th June, 09:00 BST/16:00 SGT): Are Asia’s central banks behind the curve? Can the Bank of Japan and People’s Bank of China continue to go against the grain? Find out in our special session on what global monetary tightening looks like in Asia. Register now.  

23 June 2022

More from Marcel Thieliant

Japan Data Response

Tankan (Q3 2021)

The latest Tankan survey was stronger than most had anticipated, supporting our view that the economy will recover rapidly as the Delta wave has ebbed. However, there are mounting signs that the recovery in the manufacturing sector will be hampered by supply shortages.

1 October 2021

RBA Watch

RBA set to hike in 2023

With the latest lockdowns set to end next month, we expect the RBA to taper its bond purchases in February. We still expect wage growth to accelerate more rapidly than the Bank anticipates and stick to our forecast for the first rate hike in early-2023.

28 September 2021

Australia & New Zealand Economics Weekly

APRA to impose lending restrictions by mid-2022

While house prices have surged, household debt remains contained and lending standards remain sound overall. However, housing credit growth is set to accelerate and there are already signs that some households are borrowing too much. The upshot is that we now expect regulators to impose restrictions on debt-to-income ratios by the middle of next year.

24 September 2021
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