ID :
16498
Wed, 08/20/2008 - 17:59
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http://m.oananews.org//node/16498
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BOJ Remains Optimistic about Economy despite Downgrade
Tokyo, Aug. 19 (Jiji Press)--The Bank of Japan Tuesday maintained its optimistic view about the nation's economy over the medium- to long-term, although it admitted that the economy is weakening recently.
It may take longer than expected for the Japanese economy to return onto a moderate growth path because its growth is sluggish, Bank of JapanGovernor Masaaki Shirakawa said at a press conference.
The deterioration of terms of trade stemming from surging commodity prices leads to weaknesses in corporate capital spending and personalconsumption, Shirakawa said, adding that exports are losing momentum.
But it is highly unlikely that the economy will slip into a steep downturn, Shirakawa said, noting that the economy is not under pressure toadjust production capacity and labor.
The current economic situation is different from the period after the burst of asset-inflated bubble economy in the early 1990s, when Japan's economy was saddled with excess inventory, employment and debts, Shirakawasaid.
The BOJ used the world "stagnant" for describing the state of the economy between December 1997 and May 1998, when the economy was in recession. In June 1998, the BOJ began using the word "deterioration" in describing theeconomy ridden by massive bad loans and deflation.
The BOJ lowered its economic assessment, saying that the economic growth "has been sluggish against the backdrop of high energy and materials prices and weaker growth in exports." The statement was in contrast with the previous month's view that the economic growth was "slowing further." Still, the BOJ retained its optimistic outlook in Tuesday's statement, saying that the economy will "return gradually onto a moderate growth path as commodity prices level out and overseas economies move out of theirdeceleration phase".
The statement was adopted at a two-day meeting of BOJ policymakers, who also voted unanimously to keep its unsecured overnight call rate target unchanged at around 0.5 pct. The target has remained unchanged sinceFebruary 2007, when the target was raised from 0.25 pct.
Yasunari Ueno, economist at Mizuho Securities Co., said the BOJ's outlook is based on expectations that the disappearance of negative overseas factors, including surging commodity prices, would only help bring thedomestic economy back on a recovery track.
This can be taken to mean that no prospects for a solid recovery based ondomestic factors are in sight, he said.
It may take longer than expected for the Japanese economy to return onto a moderate growth path because its growth is sluggish, Bank of JapanGovernor Masaaki Shirakawa said at a press conference.
The deterioration of terms of trade stemming from surging commodity prices leads to weaknesses in corporate capital spending and personalconsumption, Shirakawa said, adding that exports are losing momentum.
But it is highly unlikely that the economy will slip into a steep downturn, Shirakawa said, noting that the economy is not under pressure toadjust production capacity and labor.
The current economic situation is different from the period after the burst of asset-inflated bubble economy in the early 1990s, when Japan's economy was saddled with excess inventory, employment and debts, Shirakawasaid.
The BOJ used the world "stagnant" for describing the state of the economy between December 1997 and May 1998, when the economy was in recession. In June 1998, the BOJ began using the word "deterioration" in describing theeconomy ridden by massive bad loans and deflation.
The BOJ lowered its economic assessment, saying that the economic growth "has been sluggish against the backdrop of high energy and materials prices and weaker growth in exports." The statement was in contrast with the previous month's view that the economic growth was "slowing further." Still, the BOJ retained its optimistic outlook in Tuesday's statement, saying that the economy will "return gradually onto a moderate growth path as commodity prices level out and overseas economies move out of theirdeceleration phase".
The statement was adopted at a two-day meeting of BOJ policymakers, who also voted unanimously to keep its unsecured overnight call rate target unchanged at around 0.5 pct. The target has remained unchanged sinceFebruary 2007, when the target was raised from 0.25 pct.
Yasunari Ueno, economist at Mizuho Securities Co., said the BOJ's outlook is based on expectations that the disappearance of negative overseas factors, including surging commodity prices, would only help bring thedomestic economy back on a recovery track.
This can be taken to mean that no prospects for a solid recovery based ondomestic factors are in sight, he said.
