The Bank of Japan downgraded its assessments Thursday of all nine regional economies for the second straight quarter, as the novel coronavirus pandemic has continued to impact a wide range of business sectors.
In the central bank’s quarterly Sakura Report, the BOJ said the regional economies had deteriorated or were in a more severe situation compared to April, due to the global pandemic of COVID-19, the disease caused by the virus.
In a teleconference with the central bank’s regional branch managers, Governor Haruhiko Kuroda said the country’s economy had been in “an extremely severe situation” due to the pandemic, reiterating his commitment to implement additional easing measures if necessary.
“As for the outlook, the Japanese economy will pick up with an expected rise in output, an accommodative monetary environment and the government’s economic stimulus packages once the virus is subdued,” he added.
Kuroda also said the central bank would closely monitor the impact of recent floods in southwestern and central areas on the country’s economy, while pledging to maintain financing systems and ensure smooth settlements.
The BOJ decided at a June policy meeting to expand its corporate support measures to ¥110 trillion ($1 trillion) from ¥75 trillion to include new loan schemes for midsize and small companies.
The decision was intended to bolster the country’s ailing economy in line with the government’s ¥31.91 trillion second extra budget approved by the Diet last month.
However, the economy has been hit hard by the spread of the virus, with the central bank’s quarterly tankan survey showing last week that business sentiment among large manufacturers had plunged to minus 34 in June — its lowest level since June 2009 — from minus 8 in March, due to the economic impacts of the pandemic.
The index for big nonmanufacturers including the service sector dived to minus 17, its weakest value since December 2009, from 8 in the March survey.
The Sakura report — named after its cherry blossom-colored cover — is the Japanese equivalent of the U.S. Federal Reserve’s Beige Book and is released every three months following a meeting of the BOJ’s regional branch managers.
The BOJ is scheduled to hold a two-day policy-setting meeting from Tuesday.