The economy is showing some improvements in exports and production, but clear signs of a self-sustained recovery have yet to be observed, the Bank of Japan said in its monthly report released Monday.
The BOJ report for September slightly changes its assessment of economic and financial conditions by citing a recent upswing in exports to other parts of Asia and a rise in industrial production. But it remains cautious about the overall recovery, noting such factors as the peaking-out of housing investments as well as ongoing corporate restructuring, which is barring firms from making large capital investments.
The report came four days after the Economic Planning Agency announced a 0.2 percent growth in the nation's gross domestic product for the April-June quarter.
The BOJ's view is basically in line with that of the EPA, which says that, despite the positive GDP for the second straight quarter, it is still too early to declare the economy is on a steady recovery.
The BOJ specifically mentioned concerns on housing investment, which has jumped in recent months thanks to tax incentives for home buyers and low rates on government housing loans.
The central bank said housing investment has peaked out and will probably see a moderate decrease from this autumn.
Concerns also included a recent surge in the yen, which will dampen corporate profits in the near term, as well as ongoing corporate restructuring, which will reduce capital investment and discourage household spending as income and employment conditions worsen.
"Under such circumstances, it is still difficult to expect an immediate self-sustained recovery in private demand," the report says.