TOKYO (MNI) – The Bank of Japan said on Monday that seven out of
the nine Japanese regions downgraded their economic views from three
months ago, reflecting the global economic slowdown and the drag of the
strong yen on exports.

The remaining two regions left their economic assessment unchanged
from October.

“Compared with the last assessment in October 2011, seven regions
(Hokkaido, Hokuriku, Kanto-Koshinetsu, Tokai Kinki, Chugoku and
Kyushu-Okinawa) reported that the pick-up in their economic activities
had paused recently, mainly due to the effects of a slowdown in overseas
economies,” the BOJ said in its quarterly report on regional economies.

“Specifically, these regions noted that the pace of the pick-up was
moderating, the pick-up appeared to be pausing, or the economy had
paused.”

In October, five regions reported that their economies had been
picking up, aided mainly by the removal of supply-side constraints
caused by the March earthquake disaster.

Based on today’s report and various economic data, the BOJ board
will review its medium-term growth and inflation outlook presented in
the bank’s semi-annual Outlook Report, at its next policy meeting on
Jan. 23-24.

“Several regions reported that investment had become cautious,
reflecting the slowdown in overseas economies and the appreciation of
the yen,” the BOJ said.

With regard to private consumption, six regions reported “a pick-up
or continued increase in private consumption.”

As for production, “most regions reported that it had recently been
relatively weak or was more or less unchanged, or that the pace of
increase was moderating, mainly due to weaker exports stemming from the
slowdown in overseas economies.”

Many region reported that improvement had been observed in the
employment and income situation, although that severity remained.

Earlier on Monday, BOJ Governor Masaaki Shirakawa repeated his
warning that the European sovereign debt crisis may depress global
economic growth.

In his opening remarks to BOJ branch managers who gathered for a
quarterly meeting, Shirakawa also repeated the bank’s latest view that
the European problems “remain the biggest risk” to Japan’s recovery.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

[TOPICS: M$J$$$,M$A$$$,MMJBJ$,MAJDS$]