The Bank of Japan upgraded its assessment of the Japanese economy Friday for the first time in four months, citing growing domestic demand.
“Japan’s economy continues to recover gradually, and domestic demand is becoming firmer,” the central bank said in its report for April on the latest economic and financial developments.
It is the first time for the BOJ to use such a positive tone on the trend of domestic demand in its monthly report since late 1996.
The upbeat tone indicates that the BOJ has begun to view the recovery of the world’s second-largest economy as no longer only export-driven but also led by domestic demand.
The central bank had said, “Japan’s economy is recovering gradually” in its monthly reports from December to March without mentioning the recovery of domestic demand.
On corporate profits, the BOJ said they “continue to increase, and improvements in business sentiment have been spreading across industries,” as reflected in the good results of the central bank’s “tankan” quarterly survey released April 1.
Regarding private consumption — a key to determining whether Japan’s economic recovery will be sustainable, the central bank said it is “showing some positive movements,” dropping the word “currently” from the phrase.
The change suggests the BOJ believes the current upbeat data for private consumption may not just be a temporary trend.