• Kyodo


The Bank of Japan downgraded its economic assessment of two of the country’s nine regions on Thursday, citing damage caused by the Kyushu earthquakes in April and slowing personal consumption amid falling share prices.

The central bank downgraded its assessment of the Chugoku region and of the Kyushu and Okinawa region from three months earlier. But it retained its views on the other seven regions, saying they are either recovering or expanding moderately, though exports and output have been hurt by slowdowns in emerging economies including China.

In downgrading its assessment of Chugoku, an area of western Honshu including Hiroshima, the BOJ pointed to the effects of suspended minivehicle production at a Mitsubishi Motors Corp. plant in the area after the automaker admitted to manipulating fuel economy data.

Reflecting softer consumer sentiment amid sliding stock prices, the BOJ slashed its assessment of consumer spending in the Kanto, Tohoku, Chugoku and Kyushu and Okinawa regions as sales have been sluggish at department stores. Kanto includes the Tokyo metropolitan area.

The BOJ branch covering the Kyushu and Okinawa region said the tourism sector remains weak following a series of earthquakes in Kumamoto Prefecture that began in April, while some companies also suspended capital investment plans in the area.

Assessments of housing investment were upgraded in three regions, where some local companies said lower mortgage rates have stimulated home buying after the BOJ adopted a negative interest rate policy in January.

The latest assessments were issued amid fears that a firming yen may dampen Japan’s economic recovery led by major exporters, and pressure domestic consumer prices.

“There are strong calls (from companies) for stabilizing the exchange market, as an excessively volatile currency becomes an obstacle to developing business plans,” BOJ Osaka branch manager Atsushi Miyanoya told a news conference.

The dollar fell to the ¥100 level Wednesday for the first time in around two weeks as investors grew cautious again about the economic impact of Britain leaving the European Union.

BOJ Gov. Haruhiko Kuroda said earlier Thursday the central bank will ease monetary policy further if needed to achieve its 2 percent inflation target, according to a summary of his remarks at the bank’s quarterly meeting with branch managers.

The BOJ chief said the bank will implement additional easing steps in terms of quantity, quality and the interest rate if necessary to realize the BOJ’s inflation goal.

The yen’s appreciation is likely to continue weighing on consumer prices, whose benchmark gauge fell 0.4 percent in May from a year earlier.

Kuroda said consumer price inflation is likely to remain slightly below 0 percent or around 0 percent for the time being, but is expected to move toward 2 percent in the future.

On the domestic economy, Kuroda said the world’s third-largest economy is on a moderate recovery trend although a slowdown in emerging economies has dampened exports and output.

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