Two Factors Affecting Future Developments in Exports

--inventory adjustments in IT-related goods and the impact of the terrorist attacks in the U.S. --

November 2001
Ko Nakayama

The Economic Commentary series are edited and published by the Bank of Japan's Research and Statistics Department in order to provide material to deepen understandings on economic developments, mid-term economic themes, and economic indicators and statistics. The views expressed in the report are those of the authors and do not necessarily reflect views of the Bank of Japan. The English version of this series is translated by our staff based on the Japanese original.

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Abstract

Japan's economy continues to be in a severe adjustment phase from the effects of the substantial decline in exports since the beginning of this year. The continuing decline of exports to date is due not only to the rapid deceleration in the world economy lead by the U.S., but also to inventory adjustments in IT-related goods worldwide along with the contraction of final demand in the IT-related sector.

In the following, we will discuss prospects of the Japanese economy, especially from the viewpoint of Japan's exports, taking into account the following two factors: (1) the severe adjustments in the IT-related sector and synchronized deceleration of the global economy and (2) the impact of the terrorist attacks of 11 September.