MNI INSIGHT: BOJ Sees Production Recovery After Toyota Setback

Bank of Japan officials are concerned about near-term pressure on exports after Toyota Motor Corp this week outlined cuts to production because of parts shortages, but expects demand to remain solid, MNI understands.

Bank officials don't have sufficient information to clearly gauge how Toyota's decision affects the overall economy, but the world's top automaker is broadly linked to many manufacturers. However, Toyota has not downgraded its production forecast or earnings estimates for this fiscal year to March 2022.

A drop in exports or production caused by supply side factors is already under scrutiny, as reported. MNI INSIGHT: BOJ Vigilant Despite July Real Export Index Rise.

But a rebound in demand is expected as vaccination rates and lockdowns in ease in Japan and key supplier markets in Southeast Asia. Immediate changes to policy are not expected, MNI understands, although the spread of Delta variants could worsen consumer sentiment.