The economy may have entered a “recessionary phase,” according to some Bank of Japan policymakers.
The possibility “could not be ruled out,” a few members of the BOJ Policy Board said at their Oct. 4-5 meeting, minutes of the meeting released Friday showed.
A Cabinet Office official at the meeting said the government and the central bank need to “deepen their dialogues,” the record shows.
Economists at Nomura Securities Co. and Citigroup Inc. lowered their forecasts for third-quarter gross domestic product after industrial output saw its steepest fall in September since last year’s quake-tsunami calamity.
The BOJ may remain under pressure to add monetary stimulus, even after expanding its asset-purchase fund by ¥11 trillion this week.
Finance Minister Koriki Jojima said in the Diet on Friday that the economy shows signs of weakening and pledged to work with the BOJ to overcome the deflationary trend.
Nomura said Wednesday it expects the economy to contract an annualized 5.1 percent in the three months to September, followed by a 0.3 percent shrinkage in the next quarter. Citigroup and Credit Suisse Group AG are also among those forecasting two quarters of contraction through year’s end.
The Cabinet Office will release third-quarter GDP figures Nov. 12.
Economy and fiscal policy minister Seiji Maehara attended the BOJ meeting on Oct. 5, the first Cabinet minister to do so since 2003. The minutes don’t specify which government officials made comments. The Policy Board decided at the meeting to hold off from more easing after adding to stimulus in September.
The joint statement that Maehara and Jojima issued with BOJ Gov. Masaaki Shirakawa after the BPJ policy meeting Wednesday was the first of its type, Maehara said. The government “strongly expects” powerful easing until deflation is overcome, according to the statement.
G-20 support sought
The strong yen and economic slowdowns overseas are hurting the nation’s economy, Finance Minister Koriki Jojima said Friday, expressing his intention to seek support from other Group of 20 major economies.
“I will present the view on the current status of the Japanese economy and risks from the (fiscal and financial) problems in Europe and the rising yen,” Jojima said ahead of a meeting of G-20 finance ministers and central bank governors Sunday and Monday in Mexico City.
4.1% shrinkage seen
Economists project the economy shrank a real 4.1 percent on an annualized basis in the three months through September, the first negative growth in five quarters, a Kyodo News survey found.
The average forecast of economists at eight leading think tanks equates to an inflation-adjusted 1.0 percent quarterly decline in gross domestic product, the survey showed Thursday.
In the July-September period, the economy is seen to have been dragged down by sluggish overseas demand, with exports to Europe and China logging major setbacks. Meanwhile, the end of government subsidies for car purchases dampened domestic consumer spending, according to the economists.
Consumer spending, which accounts for around 60 percent of Japan’s GDP, was also hampered in other sectors due to reduced summer bonus payments for employees, the economists said.
They also pointed to the adverse effects of China’s slowing economy and noted that the situation rapidly worsened in September, when anti-Japanese sentiment flared in China over the Senkaku Islands row.