(menafn – ecpulse) (MENAFN - ecPulse)
The Japanese economy releases numerous economic data this week, which signals the unstable performance in the economy due to the slowing performance of the industrial sector, which suffers from the faltering global demand on the Japanese products, besides yen’s advance against the dollar and other currencies which is negatively impacting Japanese companies' sales.
The week started with Japan's merchandise trade surplus which narrowed to 103.2 billion yen during August, compared with the previous 589.7 billion yen, which was revised to 802 billion yen, missing expectations for 200 billion yen.
According to these data, the economic recovery is under threat as we can see the nation’s exports cooling on dampened global demand and a stronger yen; sluggish demand more than halved the nation’s growth during last quarter.
In September Japan’s government intervened in the currency market for the first time since 2004, to curb the Yen’s gains as it reached a 15-year high against the dollar, threatening Japanese exporters such as Sony Corp. and Honda Motor Co.
As for the industrial production in August, the index dropped by 0.3%, compared with the pervious decline of 0.2%. Also, Japan's annualized industrial production preliminary reading for the year ending in August rose by 15.4%, compared with the previous 14.2%.
Cooling global demand along with the yen's gains had a negative effect on the recovery, and putting Japanese companies' earnings under threat, while exports of Nissan Motor Co. (which is one of the world's biggest car makers and the third largest auto-makers in Japan) grew at the slowest pace this year.
Moreover, the Bank of Japan released its Tankan survey, which showed that companies' pessimistic view outnumber the number of optimistic forecasts for the economic status till the end of the year.
Furthermore, retail trade Index rose by 1.4% in August, compared with the pervious 0.7%, which came less than market expectations for 1.9 percent.
Japan's annualized Natl CPI for the year ending August dropped by 0.9% in line with the previous; on the year inflation was still down by 1.5%, unchanged from the previous.
As a result of the Yen's strength exports were surely impacted negatively, while the stronger yen has caused imports' costs to drop and the Japanese biggest retailers to lower their prices, increasing speculations that the Bank of Japan is likely to expand its 30 trillion yen (360 billion) lending facility during the period from October 5 and 17 to stave off deflationary pressures and support the waning recovery.
Moreover, Japanese exporters are suffering from the yen's appreciation, which has a negative effect on overseas sales; gains in the Japanese currency versus the dollar and other majors reduces Japanese companies' annual operating profits for tycoons such as Toyota, Panasonic and Sony, noting that these companies are the largest exporters in Japan.