Some Bank of Japan policymakers said exports may remain weak in the future as companies continue to shift production bases abroad and overseas demand wanes, the minutes of the central bank’s March policy meeting showed Friday.
The nine-member Policy Board shared the view that exports to emerging countries, including members of the Association of Southeast Asian Nations, remained weak, while snowstorms in the United States and Japanese firms’ moves to prioritize domestic shipments for last-minute purchases before the April 1 sales tax hike also affected exports, the minutes of the March 10 to 11 meeting showed.
As for the outlook, the members agreed that exports were “likely to increase moderately” due to the waning of temporary downside pressure and a recovery in overseas economies.
But some members said “the lack of momentum in exports was largely attributable not only to cyclical factors in overseas demand and temporary factors, but also to structural factors, including the shift of Japanese manufacturers’ production sites overseas accompanying increased local procurement,” the minutes said.
In a statement released after the meeting, the BOJ downgraded its assessment of exports, saying they “have recently leveled off more or less” from the previous month’s assessment that they had “generally been picking up.” On the prospects for wages, many members pointed out that wage hike moves were spreading to wider business sectors in the spring wage talks, but one member noted it was possible the rate of increases “might turn out to be lower than the inflation rate” even after the negotiations end.
As for the consumption tax hike, some members said it was “necessary to continue closely monitoring the front-loaded increase in demand and its subsequent decline,” as an increase in demand had occurred in housing investment and durable goods, the minutes said.
On prices, one member said the inflation rate had been “somewhat higher than anticipated,” due possibly to such factors as tightening labor conditions and changes in price-setting behavior. Another member expressed the view that it was possible that the effects of the yen’s depreciation on prices had increased, the minutes said.
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