The economy shows signs of stabilizing as exports and industrial production pick up, the Bank of Japan said Thursday. But it cautioned that structural problems and economic uncertainty in the United States are likely to slow the pace of recovery.
Net exports and production are picking up due to recoveries overseas and the restocking of inventories abroad, especially in information technology-related industries, the BOJ said in its monthly assessment of the economy. It was the central bank’s fourth consecutive upgrade.
Overall, the BOJ projected that Japan’s economy will stop declining as a whole if increases in exports and production continue. It expects this to lead to a recovery in corporate profits and a gradual rise in domestic private demand. But excessive employment and debt continue to weigh on the economy, the report says. “It will take a while for the positive momentum to spread across the nonmanufacturing sector, small firms and households.”
Corporate spending is falling, consumer spending remains weak and public investment is trailing off. Companies are continuing to reduce personnel expenses, at the expense of household income.
Coupled with uncertainty in the outlook for the U.S. economy, fragility and uncertainty persist, the BOJ said.
“Unstable movements in the foreign-exchange and financial markets at home and abroad would easily exert a negative influence on the economy,” the report said.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.