"There's a danger of appearing too reactive and changing your policy too quickly"
- Jerry Schiff, IMF Deputy Director for the Asia-Pacific Department
Industrial output in the world's third largest economy advanced 1.5% in September, on the back of strong production of vehicles and electronic components, the Ministry of Economy, Trade and Industry reported. Survey also showed manufacturers are expecting output to increase 4.7% in October; however, they see a modest decline in November. Another factor, contributing to September's gain is increased shipments by refineries and telecoms equipment. Earlier this week, figures showed unemployment fell, while retail sales and household spending surprised markets to the upside.
It is not a surprise that Abenomics are starting to pay off; however, the fact the IMF Deputy Director for the Asia-Pacific Department, Jerry Schiff, applauded the positive effect of BoJ's ultra-loose monetary policy is another welcoming sign for Shinzo Abe. Schiff also mentioned there is no need in a change for now, as policies are working as it was planned. However, in case the economy will start slowing, there is still room to increase central bank's stimulus measures, to assure a long-term sustainable growth. Japan is facing a consumption tax hike in April. This fact may weigh on economic performance. Nevertheless, Japan has already outpaced its G7 peers, expanding 3.8% during the second quarter. However, exports still remain subdued, due to a slowdown in emerging Asia, casting some doubts on the further acceleration of Japanese economy.
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