— Adds Comments By Osaka Branch Manager At Bottom
TOKYO (MNI) – The Bank of Japan on Thursday left its overview of
regional economies for April from three months ago, based on reports
from its branch managers who met here for a one-day quarterly meeting.
“All of the nine regions in Japan maintained the view similar to
the January 2010 report that their respective economies had picked up,
although there remained differences in the pace and extend of the
recovery,” the BOJ said in the latest report.
In the January report, the BOJ said, “According to reports from
each of the nine regions in Japan, the economy had picked up in all
regions, although regional differences in the pace and extent of the
recovery remained.”
The latest report said, “Compared with the assessment in January
2010, two regions (Shikoku in the west and the southern most region of
Kyushu-Okinawa) maintained their assessments, while the other seven
regions (Hokkaido and Tohoku in the north, Hokuriku, Kanto-Koshinetsu
and Tokai in central Japan, and Kinki and Chugoku in the west) reported
an upward change in the economic trend, such as an increase in signs of
improvement or acceleration in the pace of improvement I the economy.”
It also said, “However, most regions continued to point either to
the low level of economic activity or to differences in developments
among regions, industries, of firms.”
In January, the BOJ said, “Compared with the assessment in October
2009, five (Hokkaido, Tohoku, Hokuriku, Chugoku and Shikoku) maintained
their assessments, while four regions (Kanto-Koshinetsu, Tokai, Kinki
and Kyushu-Okinawa) reported an upward change in the economic trend.”
The report helps the BOJ’s policymakers assess developments in
Japan’s economy ahead of the next policy-setting meeting scheduled on
Apr. 30.
Today’s report is consistent with the BOJ’s overall economic
assessment that Japan’s economy has been picking up and the improvement
of business sentiment was confirmed in the March Tankan survey.
Managers from the BOJ’s 32 domestic branches and two general
managers from the U.S. and Europe gathered to discuss economic and
financial conditions at the bank’s head office.
BOJ Governor Masaaki Shirakawa earlier in the day stressed that it
is crucial for Japan to overcome deflation and achieve self-sustainable
economic growth with price stability.
To this effect, Shirakawa repeated, the BOJ will maintain the
extremely accommodative financial environment.
He also said that the pace of Japan’s economic recovery is likely
to be gradual.
As for consumer spending, the latest regional report said that “all
regions pointed to continued policy effects and six regions noted signs
of either picking up or leveling out in consumption of other than
durable goods.”
However, it said that private consumption as a whole remained weak
in six regions.
Unless wages show a clear sign of recovering, a recovery of private
consumption as a main driver for self-sustainable economic growth is
unlikely.
On capital spending, the report said, “six regions reported that
the decline was coming to a halt.”
But one region (Tohoku) reported that business fixed investment had
continued to decline substantially while and Tokai reported that it had
remained at a low level.
On the bright side, the report said: “Production continued to
either pick up or increase in all regions and some regions reported that
the uptrend in production was becoming widespread in sub-industries.”
Japan’s production and exports continue rising on the global
economic recovery, which has been led by strong demand from emerging
countries.
Meanwhile, the labor and income conditions remain weak.
“The employment situation remained severe in all regions, but four
regions reported signs of either an improvement or leveling out,” the
report said.
Osaka branch manager Hideo Hayakawa told a news conference: “We
pushed forward our (Kansai) economic assessment from the previous
meeting in the wake of the recovery in production, which had been weaker
compared with the national average.”
He added that capital spending is expected to recover slowly but
that its impact on the labor and income conditions would be limited.
Hayakawa also said that the current economic recovery in Kansai is
similar to the previous business expansion cycle that began in early
2002, when the growth in the region replied on exports and major firms.
“The weaker yen against other currencies, such as the dollar, euro
and won, is contributing to improving corporate sentiment and profits.”
hinoue@marketnews.com
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