Following a recession in late 2023, Japan's industrial output fell last month to its lowest level since the COVID-19 epidemic, according to official statistics released on Thursday. This further adds to the country's economic woes.

January saw a 7.5 percent decrease in factory and mine output from the previous month, the worst month-over-month drop since May 2020, the month when Covid brought the world economy to a stop.

According to Stefan Angrick, senior economist at Moody's Analytics, "many will attribute the poor January print to the Noto Peninsula earthquake which struck the northwest of Japan's main island on New Year's Day."
However "business forecasts for January had already turned sour by the end of December when a major Japanese carmaker announced it would suspend production at one of its subsidiaries", according to him.

Due to a humiliating incident involving falsified safety tests, Daihatsu, a Toyota subsidiary and expert in small cars, put a stop to its domestic manufacturing for several weeks starting in late December.

"Adding to this, a series of attacks in the Red Sea hurt trade along a major shipping route connecting Asia to Europe," Angrick stated.

The NLI Research Institute's Taro Saito stated that "production dropped sharply, not only in the auto industry but in a range of sectors" as a result of the "double effect" of the earthquake and auto scandals.
Japan is investing $1.7 billion to reconstruct the places that were severely damaged and killed 241 people in the January 1 earthquake, which also destroyed sections of the Ishikawa region.

The Bank of Japan may also be concerned about the January output statistics as it works to minimize economic shock while moving away from its long-standing ultra-loose policies.

"The poor reading adds to a series of disappointing data releases which will make it hard for the Bank of Japan to dial back monetary easing," Angrick stated.

"All up, the outlook for the Japanese economy looks incredibly fragile."

Japan's GDP contracted by 0.8 percent in the preceding quarter and then by 0.1 percent in the final three months of 2023, indicating that the country experienced a technical recession in the latter half of the previous year.

End//voice7news