In emphasising the supposed mistake made by the ECB in delaying the change in its monetary policy stance, many commentators have pointed to some errors in inflation projections. While in mid-2021 headline inflation was still below 2 per cent and core inflation was less than 1 per cent, since late last year, inflation has been unexpectedly high in the euro area.
This reflects a formation of supply chain production networks across Asia involving Japan and many other economies. This means that the trade relations between Japan and the rest of Asia are highly integrated and complex. This is evident from the fact that Japanese firms have steadily increased their ratios of overseas production to total production as a result of large outward foreign direct investment.