BOJ calls for keeping eye on uncertainty overseas

Kyodo

Bank of Japan Gov. Masaaki Shirakawa told the central bank’s regional managers Thursday that the economy is expected to return to a moderate recovery path, although the uncertainties over Europe’s sovereign debt woes and the U.S. economy still warrant attention.

At the outset of the BOJ’s quarterly meeting of branch managers, Shirakawa said everyone must continue to be vigilant.

“It is necessary to continue to monitor carefully how Japan’s economy will be affected by the uncertainty regarding the developments overseas and by the ensuing fluctuations in the foreign-exchange and financial markets,” he said.

He also said “sufficient attention” should be paid to the risks surrounding the Japanese financial system, which is currently stable.

Still, growth in overseas economies is expected to remain firm and Japan is expected to recover moderately on the back of climbing exports and rising domestic demand, Shirakawa said.

As for current conditions, he said Japan’s economy has “continued picking up” after the plunge that followed the devastating March 11 earthquake and tsunami, but noted that the recovery in production and exports has moderated.

The BOJ’s assessment of the nation’s regional economies will be released later in the day in the form of the Sakura Report, which is akin to the U.S. Federal Reserve’s Beige Book.

In the previous Sakura Report in July, the BOJ upgraded its economic assessment of seven of the nine regional economies, including disaster-hit Tohoku, adding to signs of recovery from the earthquake, which seriously damaged production and exports.