• Kyodo


The government on Wednesday downgraded its overall assessment of regional economies for the first time in 18 months, as a global chip shortage and supply chain disruptions weigh on the auto industry.

The pace of recovery in regional economies is “moderating” partly due to supply constraints, the Finance Ministry said in a report that is part of its quarterly assessment covering the nation’s 11 regions. The assessment changed from the previous view, in which it said the economies were “recovering although weakness is seen in some sectors.”

The downward revision was the first since April last year, when the economy was experiencing a serious slump caused by the initial impact of the COVID-19 pandemic.

The October report said car production is “pausing” as the worldwide semiconductor crunch — along with parts shortages, caused by factory shutdowns in Southeast Asian nations where virus cases have surged — have been forcing automakers to cut output.

The ministry downgraded assessments for four regions, while maintaining those for six regions including the Kanto and Kinki areas centering on Tokyo and Osaka.

The downgraded areas, such as the Tokai and Chugoku regions, are heavily reliant on auto manufacturing.

Only the southern part of the Kyushu region was upgraded. An official at the ministry told reporters output of electronic components and chip-making equipment has been brisk in that area.

The pace of individual consumption is also picking up “moderately,” the report said, adding that spending on accommodation and food services “remains in a severe condition.”

Business at hotels, restaurants and department stores has been on the increase recently, the report noted, following a sharp fall in new COVID-19 cases and subsequent lifting of the government’s state of emergency across the country on Oct. 1.

Employment conditions show some weakness due to the pandemic, although the number of job offerings is solid especially among manufacturers, the ministry said.

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