Reinforcing the perception that the country’s economy is turning around, Japan’s industrial production has recorded growth for the third straight month in January.
The Trade Ministry said that factory output grew by 2.4 percent in January for the third consecutive month, while growth for December was recorded at 3.3 percent.
Metal, machinery and transportation equipments drove the output growth, the ministry said. However, some analysts said they expected a more robust growth rate in January.
Nonetheless, the data indicates an overall improvement in output and growth.
“Data overall confirmed a steady improvement in production given that output is expected to increase in February and March”, said Yasuo Yamamoto, analyst with Mizhuo Research.
The recent survey conducted by the Trade Ministry seemed to support this opinion as manufacturers believed that factory outputs will grow by 0.1% in February and 1.9% in March.
Despite the overall optimism, the recovery remains fragile and suffer setbacks due to external and internal factors, analysts warn.
The biggest issue before the world economy remains the turmoil in the Middle East and the resulting spike in energy prices. Food inflation also remains a cause for worry.
“Rises in commodity prices are a big risk factor. If oil prices go up $20 more than they were before the recent unrest in the Middle East and Africa, it could push down Japan’s gross domestic product for next fiscal year by 0.3 percentage point”, warned Tatsushi Shikano of Mitsubishi UFJ Morgan Stanley.
Rising commodity prices will hurt both the producer and the consumer, he added. An improving global financial climate has been largely driving Japan’s export dependent economy’s recovery.