The Bank of Japan on Monday downgraded its assessments of seven of the nation’s nine regional economies, mainly citing weak exports and industrial output.
“Many regions in Japan judged that there were signs of a moderate recovery on the whole, but seven regions . . . reported that the recovery seemed to be pausing or had paused recently,” the BOJ said in its quarterly report, released after a meeting of the central bank’s branch managers.
The previous survey, conducted in October, downgraded only three of nine regional evaluations.
The seven regions are Hokkaido, Hokuriku, Kanto-Koshinetsu, Tokai, Kinki, Chugoku and Shikoku. For the remaining two, Tohoku and Kyushu-Okinawa, the BOJ kept its assessments on hold.
Adjustment for inventories in the information-technology sectors abroad has slowed down exports and production for Japanese manufacturers, the report said, while falling demand for some durable consumer goods — which coincides with the diminishing effects of the government’s fiscal stimulus measures — has weighed down business sentiment in many regions.
The Japanese economy has been recovering but the pace of growth appears to be slowing amid weak consumption and production, BOJ Gov. Masaaki Shirakawa told the managers of the bank’s 32 branches earlier in the day.
Shirakawa said economic growth seems to be “taking a breather,” virtually echoing the government’s description of growth as “pausing,” and said the BOJ will keep using “strong monetary easing” to help beat deflation.
The BOJ has effectively kept its key short-term interest rate at zero to boost the economy while pumping money into the financial system through such unusual methods as purchasing riskier assets from banks, to boost lending.
The governor also expressed concerns about the debt problems hampering the eurozone and the impact they will have on the global economy and financial markets.
On a more optimistic point, Japanese exports and earnings are expanding, albeit at a slower pace, and companies are leaning toward increasing capital spending, Shirakawa said.
Private consumption, however, has been declining since the end of fiscal stimulus measures that spurred a surge in demand. Shirakawa also said industrial production has become slightly weaker, with business confidence sluggish especially among manufacturers.
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