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Bank of Japan officials will likely revise their near-term optimistic view on exports and production on additional supply restrictions caused by the closure of automobile plants in Southeast Asia because of the spread of Covid-19, MNI understands.
Exports and production are expected to temporarily slow in the third quarter of this year caused by shortages of automobile parts. Thailand has been hit by a surge in cases and low vaccination rates with Toyota Motors, Isuzu, Honda Automobile, Nissan Motors, Mitsubishi Motors and Suzuki Motors with operations there. Manufacturing operations in Indonesia and Malaysia are also affected.
At the same time, shortages of semiconductors used in automobile manufacture are expected to ease by the third quarter.
But the plant closures and shortages could prompt the BOJ to revise down an earlier optimistic view on exports as reported: MNI: Q2 Real Export Index Rises 3.5% Q/Q; Underpins BOJ Views. However, the recovery path is seen as intact over the longer run as vaccination rates rise.
Japan's economy may face other downward pressure from sluggish private consumption, which accounts for about 60% of gross domestic product, as the slow rollout of vaccinations and higher infections overshadows the recovery of private consumption, including pent-up demand.
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