SMBC Nikko: Japan's industrial output may be supported by AI capital spending, with a lower risk of severe oil supply shortages

(1) Economists at SMBC Nikko Securities stated in a report that Japan's industrial output may be supported by AI-related capital expenditures. (2) Japan's industrial production in August fell by 1.7% compared to the previous month. SMBC Nikko pointed out that this decline was partly due to earthquakes and typhoons causing automobile manufacturers to suspend operations at some factories. (3) The institution noted that uncertainty about the outlook for crude oil supply remains very high, but Japan still maintains oil reserves equivalent to about 200 days of domestic consumption and has made progress in securing alternative supplies. (4) These economists stated that the risk of a potentially severe oil supply shortage currently appears to be low.