Japan's industrial production growth is being driven by temporary forces and could fade in due course, a report released by BNP Paribas said Wednesday.
Japan recently released its industrial production numbers for August, with output rising 1.8% sequentially - the sixth straight monthly increase. But despite the rising trend in industrial activity, the firm foresees a bleak outlook for the manufacturing sector.
The French firm said that the recovery in the industrial sector was being driven by two temporary factors: diminishing destocking and government stimulus plans, and expressed uncertainty regarding the outlook for the sector when the effects of these temporary factors wore off. The firm noted that a major problem for Japanese industries is capacity overhang. Moreover, the appreciation of the yen harms the international price competitiveness of Japanese producers.
The firm also expects the Bank of Japan to withdraw some of its temporary measures such as the buying of corporate debt, since persisting with these measures for a long time might distort the financial market.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.