Bloomberg
Published Nov 28, 2019 08:59PM ET
Updated Nov 28, 2019 10:48PM ET
Japan’s Output Drop Raises Risk of Steeper Economic Slide
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Japanese industrial production fell more than expected in October, signaling the possibility of a steeper contraction in economic growth ahead and boosting the case for a bigger government stimulus package.
The global slowdown, a sales tax hike and a super typhoon contributed to a 4.2% slide in factory output from a month earlier, matching the worst drop in the last five-and-a-half years and falling more than twice as much as economists forecast, data from the economy ministry showed Friday.
Japan Eyes Big Fiscal Stimulus With Little Concern Over Debt
The steep drop, following declines in retail sales and exports, comes as the government mulls stimulus measures to help the economy cope with the typhoon damage, weak external demand and the hit to consumers from the tax increase.
More fiscal stimulus would be good news for the Bank of Japan, which has appeared reluctant to ramp up its own massive stimulus program, as it strains at the limits of effectiveness.
Key Insights
“Our basic view is that Japan’s growth would slow as a result of weakening external demand pressuring exports. This is playing out, but the trajectory is a little weaker than anticipated. All this adds up to a greater need for fiscal support, given the Bank of Japan’s hands look mostly tied.”
--Yuki Masujima, economist
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Written By: Bloomberg
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