Situation
- On a monthly basis production has contracted by -0.09% ( -0.28% drop in Mar’07)
- On a yearly basis production has grown by 2.48 % p.a ( 3.16 % p.a in Feb’07)
Background
- Production decreased, Shipments and Inventory increased, Inventory Ratio decreased.
- Dramatic fall in new orders in Mar’07 ( strongest fall since May ‘02 )
- Japan - Production growth rate drops in Mar’07
Conclusion ( click on image for a bigger visual)
- Production can be expected to grow at a rate of 1.80% p.a - 1.40% p.a towards Jul’07
- Growth rate range between 0% - 3% p.a towards end 2007
With production down - Japans GDP cannot be expected to offer a very positive picture for Q2 and Q3 2007.
Compounding this situation, the Bank of Japans statement after the last monetary Policy meeting suggests that they may consider interest rates hikes giving a priority to inflation - even if effects growth
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