Japan: A slowing economy and inventory adjustments

- A slowing economy and inventory adjustments
• "Inventory levels have started to creep higher in the manufacturing sector on the slowdown in shipment as post-crisis inventory restocking and economic stimulus effects have been largely played out."
• "While they remain relatively low for manufacturers as a whole, we believe that there should be little need for drastic inventory and output cuts at the macroeconomic level even if the global economic recovery does continue to lose momentum."
• "That said, some sectors – such as information & communication electronics equipment, electronic parts & devices, and transport equipment – have started to accumulate substantial inventories. These sectors may face a need for relatively deep inventory adjustments if demand does indeed turn out to be weaker than previously anticipated over the coming months."
- Momentum of recovery in production continues to slow down
• "Industrial production was stronger than the consensus forecast (-0.2%mom). However, as an indication of the momentum of the recovery, production dropped by 0.7% when compared with three months ago, the first decrease in 15 months."
- BoJ introduced an additional fund-supplying operation
• "BoJ decided to add ¥10tn in six-month fixed-rate fund supplying operations"

CreditSuisse Japan Economics Weekly 20100902

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