October would be the fourth consecutive month of decline.
DBS Group Research noted:
October industrial production (due tomorrow) is expected to contract -2% MoM sa, the fourth consecutive month of decline. Exports fell further by about -3% in October, both in nominal and in real terms.
The METI forecast also points to a -1.5% decline in industrial production in October. Although exports in other part of Northeast Asia have started to pick up thanks to recovering demand from China, Japan will likely continue to underperform due to its political tensions with China and the weakness of export competitiveness.
Given the continued contraction in exports and industrial output, chances are high that GDP growth has remained negative for the second consecutive quarter in 4Q – matching the definition of a technical recession. We expect a negative GDP growth of -1% QoQ saar in 4Q, compared to -3.5% in 3Q.
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