TOKYO”•Japan’s factory output stagnated in July from the previous month, data showed on Wednesday in a further blow to the world’s third-largest economy.
The lackluster result came after a series of disappointing data, which raised a red flag for an economy that stalled in the second quarter.
A drop in household spending, weak exports, and disappointing inflation figures have dealt a blow to Japan’s war on deflation, which will heap fresh pressure on the Bank of Japan to unleash another wave of growth-boosting stimulus.
Industrial production showed no growth in July, according to the Ministry of Economy Trade and Industry, after an expansion of 2.3 percent in June.
The July result was worse than a forecast of a 0.8 percent expansion in a survey of economists by Bloomberg News.
Shipments, meanwhile, increased 0.9 percent, the ministry said, a slower pace than the 1.7 percent expansion recorded the previous month.
Japan registered zero growth in the April-June quarter, as weak demand overseas and a fall in business spending dented activity.
Those worse-than-expected figures aggravated doubts among many economists as they increasingly write off Prime Minister Shinzo Abe’s bid to fire up growth, dubbed Abenomics.
His plan”•a mix of massive monetary easing, government spending and red-tape slashing”•initially brought the yen down from record highs, setting off a stock market rally and boosting corporate profits.
But it has stumbled more than three years after it was unveiled, and Japan’s major exporters have seen their bottom line dented by the sharp reversal in the currency.
A strong yen makes them less competitive overseas and shrinks the value of repatriated profits.
Many of the county’s best-known firms, including Sony and Toyota, reported lower profits in the three months to June owing to the currency’s rally.
Wild volatility on global financial markets and Britain’s shock decision to leave the EU stoked demand for the yen, which is seen as a safe investment in times of turmoil.
Japanese officials have repeatedly hinted at a possible market intervention to tame the currency, but it has had little effect.