Home >News >World >Bank of Japan keeps rosy view of regional Japan, warns on capex outlook
General view of Bank of Japan (BOJ) quarterly branch manager’s meeting at BOJ headquarters in Tokyo, Japan. Photo: Reuters
General view of Bank of Japan (BOJ) quarterly branch manager’s meeting at BOJ headquarters in Tokyo, Japan. Photo: Reuters

Bank of Japan keeps rosy view of regional Japan, warns on capex outlook

In a quarterly report on regional economies, BoJ maintained its assessment for eight out of nine areas and cut its view for the Tohoku North East region

Tokyo: The Bank of Japan (BoJ) maintained its optimistic economic assessment for most regional areas of the country on Thursday, but warned that some companies were putting off capital expenditure because of uncertainty over the global outlook.

Some regions also saw signs that recent market turbulence and the yen’s recent sharp rises were hurting private consumption and business confidence.

“Luxury items, which had enjoyed strong sales, haven’t been selling well since March. This may be due to the weakness in Japanese stocks," Toru Umemori, head of the BoJ’s branch overseeing the Tokai central Japan region, told reporters.

In a quarterly report on regional economies, the central bank maintained its assessment for eight out of nine areas and cut its view for the Tohoku North East region.

“While exports and output are showing some weaknesses due to the effect of slowing emerging market growth, capital expenditure is increasing as a trend and private consumption is on a firm note," the BOJ said in a report published after a quarterly meeting of its branch managers.

BoJ governor Haruhiko Kuroda told the meeting that while Japan’s economy continues to recover moderately as a trend, the central bank was ready to take additional monetary easing steps if needed to hit its 2% inflation target.

Cautious spending

While most regions said their economies were recovering or expanding moderately, some saw firms slashing capital spending plans reflecting the recent slowdown in emerging market demand, the report said.

“There are some concerns that companies may become cautious in spending on plant and equipment," the report noted, warning that volatile financial markets and uncertainty over the global economy may undermine corporate investment appetite.

A decline in the domestic market because of the rapidly aging population is also discouraging firms from boosting investment, it said.

The yen’s sharp ascent has hurt sentiment of big manufacturers in the Kansai western Japan region, home to electronics giants such as Panasonic, said Atsushi Miyanoya, head of the BoJ’s branch overseeing the area.

“Companies in the region complain that volatility (in the currency market) is making it hard for them to craft business operation plans, and want currencies to move in a stable manner," he told a news conference.

The regional report will be among key factors for the BoJ’s nine-member board to consider when deciding whether to expand monetary stimulus at its next rate review on 27-28 April. Reuters

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