TOKYO (MNI) – The Bank of Japan said on Tuesday that industrial
production is expected to rise in the October-December quarter from the
previous three months but warned that the global slowdown will keep it
sluggish.

“For the fourth quarter, production is projected to increase,
notably in electronic parts and devices whose production is expected to
increase in line with the introduction of new products in the IT-related
sector,” the BOJ said in its monthly economic report.

“However, with the pick-up in overseas demand lagging behind,
production is expected to remain weak as a whole.”

Japan’s industrial output fell for a second straight month in
August, down 1.3% on the month, as the global slowdown continued to hit
the economy and domestic demand lost steam on fading effects of
subsidies for buying low-emission vehicles.

The government’s latest survey of firms’ forecasts showed that
production is expected to drop 2.9% in September before being unchanged
in October.

Exports and industrial production are expected to remain relatively
weak for the time being and increase moderately thereafter as overseas
economies gradually emerge from the deceleration phase, the BOJ said,
repeating its latest outlook.

Last month the bank said production will turn upward marginally and
that there is a high degree of uncertainty about whether it is likely to
happen.

“As for business sentiment, firms have turned somewhat cautious
mainly against the background of the deceleration in overseas
economies,” the BOJ said, referring to the results of its September
Tankan survey.

At its latest two-day policy meeting that ended on Friday, the BOJ
board voted unanimously to leave the target of its financial
asset-buying program at Y80 trillion after raising it from Y70 trillion
about two weeks earlier.

But in the face of the lingering global economic slowdown, the BOJ
revised down its assessment for the second month in a row, saying,
“Japan’s economic activity is leveling off more or less.” .

tokyo@mni-news.com
** MNI Tokyo Newsroom: 81-3-6860-4822 **

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