— Adds Osaka Branch Manager Remarks, Background In 13th-16th Paragraph
TOKYO (MNI) – The Bank of Japan on Monday said that seven out of
Japan’s nine regions cut their regional economic view from three months
ago, saying the recovery is pausing or had paused recently.
“Many regions in Japan judged that there were signs of a moderate
recovery on the whole, but seven regions reported that the recovery
seemed to be pausing or had paused recently,” the BOJ said in its latest
regional economic report.
It is the first time since April 2009 that seven regions lowered
individual economic assessments from the previous meeting.
The latest report also said, “Compared with the assessment in
October 2010, a large number of regions observed that the pace of
improvement seemed to be pausing.”
In the previous report in October, the BOJ said, “All nine regions
in Japan judged that, on the whole, their economies had either recovered
at a moderate pace of picked up.”
It also said, “Three regions (Kanto-Koshinetsu, Tokai and Chugoku),
however, reported that the pace of recovery or pick-up had recently
slowed mainly due to the waning effects of policy measures and the
slowdown in overseas economies.”
The latest report also said, “An increasing number of regions
reported the following as background to these developments: (1) weaker
exports due to inventory adjustments in IT-related goods and the
slowdown in overseas economies; (2) a reverse in demand for some durable
consumer goods following the sharp increase; (3) weaker production
affected by these two factors.”
The previous meeting in October was the first time since April,
2009, that at least one region lowered its economic assessment from the
previous meeting.
The quarterly economic report, or Sakura Report, is equivalent to
the U.S. Federal Reserve’s “Beige Book.”
Today’s report on the regional economic assessment is consistent
with the BOJ’s latest economic assessment presented in December.
The BOJ said in December, “Japan’s economy still shows signs of a
moderate recovery, but the recovery seems to be pausing.”
Looking ahead, the BOJ said, “Japan’s economy is likely to grow at
a slower pace for some time, but it is expected to return to a moderate
recovery path thereafter.”
Meanwhile, BOJ Osaka branch manager Hideo Hayakawa, who is also one
of the six executive directors supporting the governor, told reporters
that while the economic assessment in his region was revised down from
three months ago, it should be able to move out of the current sluggish
state in not so distant future.
“It will be before too long before exports stop falling, judging
from the recent economic data, mainly from the U.S. and Europe,” he
said.
Hayakawa also said, “The euro continues to fluctuate, and there is
no imminent fear, but firms are worried that fiscal problems in Europe
could prompt the euro to depreciate against the yen.”
He predicted that capital spending in fiscal 2011 starting on April
1 will rise slightly from a year earlier but remain weak, compared with
cash flows at firms.
On individual economic components, the BOJ’s latest regional
economic report said on Monday, “As for business fixed investment, five
regions reported that it was picking up, had begun to pick up, or had
increased albeit remaining at a low level.”
At the previous meeting, six regions noted that it was picking up,
had begun to pick up, or that it had increased although remaining at a
low level.
As for private consumption, the latest report said, “six regions
continued to report that private consumption had been picking up or that
its decline had been coming to a halt as a trend.”
In October, six regions reported that the consumption was picking
up or that its decline had been coming to a halt, because the degree of
severity of the employment and income situation had eased.
The January report also said, “Production had recently declined
slightly in most regions, mainly due to weaker exports caused by
inventory adjustments in IT-related goods and the slowdown in overseas
economies, and a decline in demand following a last-minute increase
ahead of the expiration of policy measures for purchasing some durable
consumer goods.”
The BOJ has said that production is falling somewhat.
The latest report also said, “The employment and income situation
remained severe, but almost all regions reported that the degree of
severity had eased.”
As for the employment situation, almost all regions reported that
labor market conditions had been improving, it said.
The January report said, “As for household income, all regions
reported that it was reaching a bottom.”
This is consistent with the recent drop of unemployment rate and
the improvement of wage data.
Managers from the BOJ’s 32 domestic branches and two general
managers from the U.S. and Europe gathered to discuss economic and
financial conditions at the bank’s head office.
BOJ Governor Masaaki Shirakawa told the managers at the opening of
the meeting earlier Monday, “Our economy shows signs of a moderate
recovery, but seems to be pausing.”
“Japan’s economy is likely to grow at a slower pace for some time,
but is expected to return to a moderate recovery path thereafter on the
premise that economic growth of global economy led by emerging and
commodity-export countries is expected to increase,” he added.
Shirakawa also said that the global economy is recovering and
financial markets remain stable overall despite some instability caused
by concerns about sovereign debt problems in Europe.
tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **
[TOPICS: M$J$$$,M$A$$$,MMJBJ$,MAJDS$]
