The Japanese industrial output fell second time in a row by 1.2% in February 2008 due to decline in the country’s exports in last few months.
According to the data released by the Japan’s Ministry of Economy, Trade and Industry, industrial output of the country plunged by 1.2% in February 2008 against January 2008, resulting into a second consecutive decline as the export from the country fell down, as reported by MarketWatch.
The data also disclosed that industry experts were expecting downfall of 2.2% after analyzing the January 2008 drop of 2.2%. On the contrary, the industrial output in December 2007 increased by 1.4%. In fact, this was also the first instance when industrial output dropped for two straight months. The shipments also fell nearly 2.6% from January 2008 and inventory edged down by 0.1%.
Auto and electronic goods export, the key drivers of the Japanese economic growth in last few years, also witnessed huge slump caused by depreciation in the US Dollar against the Japanese Yen. In view of this, company executives became more vigilant and cautious about export though demand from developing countries for goods is scaling high, keeping overall exports of Japan up.
Reduction in the industrial output gives an impression that manufacturers are taking precautions amid growing uncertainty on the outlook of global demand. Apparently, production cycles have an important role in the growth of Japanese economy and consequently, it is heading for a short-term recession.
Apart from these factors, Japanese economy is badly hit by the skyrocketing energy and food prices (Japan imports crude oil and wheat). Consumers and small businesses find it difficult to deal with the problem. Moreover, subprime housing market crisis coming at a time when consumer is struggling to increase his spending further brought down production.
Meanwhile, the Ministry of Economy forecasted that the industrial production level might remain low till the second later half of 2008 as the big developed economies including the US are trying hard to recover from economic recession.
According to a Research Analyst at RNCOS, “The global economic recession impact is falling upon the Japanese industrial output resulting into a decline. This is severely affecting the total exports of the country and is also restraining Japanese businesses to put their expansion plans on back burner.”
