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Japan’s economy to see low impact from Japanese firms’ Russia exodus

Japan’s economy to see low impact from Japanese firms’ Russia exodus

With Japanese manufacturers entering the growing list of businesses exiting Russia, economists reportedly believe that it will likely have a limited direct impact on Japan’s firms in terms of business. However, supply chain disruption of resources are expected to continue causing headaches.

Manabu Shimoyashiro, Senior Director of Overseas Research Department, Japan External Trade Organization, stated that in comparison to their whole overseas operation, Japanese firms’ business in Russia is relatively less, adding that Russia is not a major market for them and hence their withdrawal will not affect Japan’s economy greatly.

As of February, 347 Japanese companies had been operating in Russia, with 45% of them being automakers and other manufacturers, according to Teikoku Databank Ltd., a credit research firm. 

Toyota, one of the major automakers there, suspended its St Petersburg plant early this month, and even ordered its Japanese staff back home, due to supply chain issues.

Mitsubishi Motors and Nissan Motor also evacuated the staff at their local Russian factories, becoming a part of around 330 global businesses that withdrew from Russia in protest, as per the Yale School of Management.

Koichi Fujishiro, Senior Economist at Dai-ichi Life Research Institute, stated that manufacturers are having difficulty in continuing operations in Russia as the crisis in Ukraine is inching closer to a point of no return.

But Fujishiro stated that the exit from Russia will not cause downward revisions in their earnings, with businesses currently focusing on the surged crude oil prices.

Japan is also among the countries that have frozen Russian assets and excluded seven banks from SWIFT to block trade and monetary transfers. However, Fujishiro warns that the ones implementing sanctions might also suffer in some way. 

Fujishiro explained that automakers already experiencing a shortage of semiconductors, will face further hindrance in their output if the current situation results in a supply chain collapse of metals like palladium and platinum.

Researcher Shinichi Nishioka, Japan Research Institute, stated that if the Russian economy shrinks by 10%, then Japan’s GDP is expected to have a small downward pressure of around 0.15% point.

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Meghna Singh

An English Literature graduate, Meghna Singh ventured into the profession of content development to incorporate her knack for writing articles across verticals including technology, healthcare, business, and alike for News Origins and Newsorigins. She has also completed her MBA in Tourism and worked as a content creator in the field of product development.