TOKYO: Japan’s industrial output unexpectedly fell, raising concern that the economy may have fallen back into its second recession since Prime Minister Shinzo Abe took government.
The slump in production is likely to intensify debate on the need for Abe’s administration to increase spending and for Bank of Japan Governor Haruhiko Kuroda to boost already unprecedented monetary stimulus from the BOJ.
Falling prices and weak consumer spending at home, combined with a slowdown in China that’s reverberating globally, are weighing on Japanese businesses. They’re holding back investment as inventories pile up in warehouses at a time when Abe wants them to ratchet up wages and funnel cash into new capital equipment.
“The economic recovery has ground to a halt,” said Marcel Thieliant, a Singapore-based economist for Capital Economics. Thieliant, along with economists at Mizuho Securities, SMBC Nikko Securities and Nomura Securities all flagged the risk that gross domestic product for the quarter ending today may have contracted.
