Production in Japan's machine tool industry returns to pre-quake levels

According to Kyodo News on August 15, Japan's real gross domestic product (GDP) in the second quarter showed negative growth for the third consecutive quarter, mainly because the sharp decline in production and consumption after the Great East Japan Earthquake is still recovering. Although the GDP growth rate is expected to rebound sharply in the third quarter with the recovery of production, the recovery of the Japanese economy may also face variables due to multiple blows such as the historic appreciation of the yen and the slowdown of the overseas economy. With the recovery of the supply chain, the production activities of enterprises have shown a trend of improving month by month. Production in some industries, including machine tools, had recovered to pre-quake levels in February as of June. Exports and consumption are also gradually improving. According to the average forecast of 42 private economists compiled by groups outside the Cabinet Office, the annual rate of GDP growth in the third quarter is expected to show a V-shaped reversal of 4.6%. On the other hand, financial market turmoil such as the historic appreciation of the yen and the slump in global stock markets caused by the debt problems in Europe and the United States, as well as worries about a global economic slowdown, are casting a shadow over the Japanese economy. In particular, a weakening U.S. economy could have an impact on the Japanese economy by reducing exports to the U.S. According to the analysis of the report, although Japan’s post-disaster reconstruction is worth looking forward to in boosting domestic demand, if the exchange rate of the yen remains high for a long time, companies may speed up the pace of overseas transfers. The government must take precautions and provide preferential policies to companies that stay in the country. and other measures to prevent the hollowing out of the industry.