• SHARE

The economy has stopped deteriorating but a recovery is not yet in sight, the Bank of Japan said in a monthly economic assessment released Thursday.

In its May report on economic and financial development, the central bank mostly stuck to an assessment shown previously, but underscored its view that economic conditions have stopped worsening.

In April, the BOJ phrased it more carefully, saying the economy “appears to have stopped deteriorating.”

The BOJ cited several positive factors, such as recovering housing investment and a surge in public works orders. But corporate investment in equipment is on a downward trend and private consumption remains weak on the whole, the bank said.

“As for the outlook, with the progress in inventory adjustment gradually paving the way for a recovery in production, the government’s economic measures and the monetary easing by the bank will continue to underpin the economy,” the report says. “Improvements in the financial environment are also expected to exert positive effects on the economy gradually.”

But ongoing full-scale corporate restructuring, while expected to improve productivity eventually, might discourage equipment investment in the short term, the BOJ said, noting restructuring might also discourage household spending as income and employment situations worsen.

“Under such circumstances, it is still difficult to expect an immediate self-sustained recovery in private demand,” the report reckons.

Coronavirus banner