, Japan

Japan’s industrial production to drop 2.4% in September

But it may have increased 2.8% in August, says DBS.

According to DBS, The V-shaped growth path will naturally slope downwards from 4Q11 onwards after the supply chain recovery becomes complete.

Here’s more from DBS:

Industrial production increased 0.6% MoM sa in July after rising 3.8% in June. Producers forecast a 2.8% output increase in August followed by a drop of 2.4% in September. On the quarter-on-quarter basis, this means industrial output will still register a strong growth of 27.4% saar in 3Q, and the third quarter GDP should still achieve our forecast of a significantly positive 5% QoQ saar (-0.5% for the whole year of 2011).

The weakness in production forecast for September indicates the downside risks to the growth outlook ahead, however. The V-shaped growth path will naturally slope downwards from 4Q11 onwards after the supply chain recovery becomes complete.

The external headwinds have also increased recently because of weaker G2 economic prospects. The recovery strength in 4Q11-2012 would largely hinge on the pace of domestic reconstruction – more information on the third reconstruction budget will be available in 4Q following the formation of the new cabinet.  

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