The nation’s graying population will continue to exert downward pressure on the country’s economy but some of the associated problems can be addressed by businesses responding to growing overseas demand and other measures, Bank of Japan Gov. Masaaki Shirakawa said Wednesday.
“The current difficulties come not from the continued population aging itself, but from the delayed response to it,” Shirakawa said in opening remarks at a conference in Tokyo on demographic changes and macroeconomic performance.
As for possible “remedies,” Shirakawa said businesses can grow by meeting the demand in fast-growing emerging economies with exports and foreign direct investment, which would result in a surplus in the income balance.
The governor also said he disagrees with a view that Japan’s current account balance will fall into the red over time, as signaled by the fiscal 2011 swing to a deficit in the country’s trade balance.
The trade deficit can be attributed to “temporary” factors, Shirakawa said, referring to the disruption of supply chains due to the March 2011 earthquake and tsunami, which hit exports, and the increasing demand for thermal power generation because of the disaster-triggered nuclear crisis at the Fukushima No. 1 power plant, which led to increased imports of liquefied natural gas.
Also touching on the fact that the Japanese income balance recorded 2.5 percent of nominal gross domestic product on average from 2002 to 2011, he said: “Those figures suggest the Japanese current account surplus will continue for the time being.”
BOJ’s profit jumps
The Bank of Japan said Tuesday it logged a net profit of ¥529 billion in fiscal 2011, which ended in March, some tenfold more than the previous year, thanks mainly to a sizable fall in foreign exchange losses.
The profit was the highest since the bank was ¥640.7 billion in the black in fiscal 2007.
Based on the BOJ Law, the central bank will contribute ¥502.6 billion of the fiscal 2011 net profit to state coffers.