BOJ concerned weak exports point to structural problem, minutes show


Bank of Japan policymakers have raised concerns about the nation’s slowing exports, with some citing “structural factors” that might not be addressed in the near term, according to the minutes of their meeting released Friday.

The central bank’s nine-member Policy Board agreed that exports “had leveled off more or less” but expects them to “increase moderately, mainly against the background of the recovery in overseas economies,” the minutes of the June 12 to 13 meeting said.

But looking into why exports lack momentum, a few members “pointed to the possibility that structural factors . . . could be influencing exports to a larger degree than had been expected.”

The factors they cited included the weakening global competitiveness of Japanese firms and manufacturers’ decision to shift production centers abroad due to the yen’s appreciation during the global financial crisis that started in 2008 before Prime Minister Shinzo Abe came to power in late 2012 and weakened it with radical monetary policy and traditional fiscal stimulus.

A stronger yen erodes the value of Japanese exporters’ overseas profits when converted into the home currency. Companies have been increasingly seeking cheaper labor costs abroad, prompting transfers of manufacturing centers.

Referring to the destinations for Japanese exports, some BOJ policymakers expressed concern about “sluggishness in emerging economies,” particularly in Southeast Asia.

On Japan’s economy, the board members agreed that the labor market has continued to improve as marked by the steadily falling unemployment rate. One member “pointed out that wage increase movements were spreading even to small firms,” the minutes said.

The BOJ hopes that widespread wage hikes will help push companies to raise prices so the central bank can achieve its inflation target of 2 percent as it tries to help stamp out chronic deflation.

At the June meeting, the BOJ kept its unconvential monetary policy steady, continuing the aggressive easing launched in April 2013 in which it purchases massive amounts of Japanese government bonds and other financial assets from banks and tries to double the nation’s monetary base to encourage lending as it strives to reach its inflation goal in or around fiscal 2015.