The Bank of Japan kept its economic assessment of six of the country’s nine regions level on Monday but downgraded Tokai, where Toyota Motor Corp. and its suppliers are based, as the yen’s appreciation weighed on export-oriented manufacturers.
“The Tokai region revised its assessment downward, reporting that private consumption had shown relatively weak developments in some indicators,” the quarterly report said.
The central bank meanwhile upgraded the Chugoku and Kyushu-Okinawa regions, describing their economies as recovering from the big earthquakes that struck the southwest earlier this year.
While the report suggests Japan’s economy is on a moderate recovery track, the outlook for consumer spending remains uncertain in some areas as the strong yen erodes exporters’ overseas profits upon repatriation, dragging down income growth.
The nine regions are, from north to south, Hokkaido, Tohoku, Hokuriku, Kanto-Koshinetsu including Tokyo, Tokai, Kinki, Chugoku, Shikoku and Kyushu-Okinawa.
In July, the Chugoku and Kyushu-Okinawa regions cut their economic views after powerful earthquakes in April disrupted supply chains and halted production at several manufacturers.
The BOJ’s report on regional economies is usually released after the quarterly meeting of branch managers. The so-called Sakura Report, named after its cherry blossom pink cover, is regarded as Japan’s version of the U.S. Federal Reserve’s Beige Book.
As growth in domestic demand is unlikely to push up consumer prices soon, Bank of Japan Gov. Haruhiko Kuroda said earlier in the day that the central bank will adjust monetary policies if necessary.
Kuroda said the bank will continue to make appropriate policy adjustments, taking economic, price and financial developments into account, toward achieving its 2 percent inflation target, according to a summary of his remarks at the central bank’s quarterly meeting of branch managers.
Until the last meeting in July, Kuroda had said the BOJ would take additional monetary easing measures if necessary, but this time he did not use the phrase.
Japan’s core consumer price index, excluding volatile fresh food prices, fell for the sixth straight month in August, down 0.5 percent from a year earlier, government data showed last month.
Kuroda, however, stayed positive on price conditions, saying the year-on-year change in the index is likely to remain slightly below or around zero percent for the time being but is expected to move toward 2 percent in the future.
At the latest Policy Board meeting ended on Sept. 21, the central bank conducted a “comprehensive assessment” of its monetary tactics since Kuroda took office in March 2013.
The BOJ concluded that a plunge in crude oil prices, sluggish domestic demand in the wake of a consumption tax hike in 2014, and instability in financial markets had thwarted its efforts to stoke 2 percent inflation for the past three years.
Crude oil prices have turned upward in recent weeks, especially after the Organization of Petroleum Exporting Countries reached a deal to cut oil output in late September.
Kuroda also said the Japanese economy remains on a moderate recovery trend although a slowdown in emerging economies has dampened exports and industrial output. He said the economy is expected to expand moderately.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.