Japan's central bank remains tentative on sustained economic recovery for Japan

November 24, 2009 2:56 pm 

TOKYO, Nov. 24 — The Bank of Japan (BOJ) said on Tuesday that despite improvements in the economy "mainly due to various policy measures taken at home and abroad … the momentum of self-sustaining recovery in domestic private demand remains weak."

The BOJ said in its Monthly Report of Recent Economic and Financial Developments for November that it expected falls in prices to start slowing down toward the end of the year. "The year- on-year pace of decline in consumer prices is expected to moderate toward the year-end as the effects of the prices of petroleum products abate," the bank said. It failed to mention that last week the domestic demand deflator, a key measure of deflation, dropped by 2.6 percent, its highest fall in more than half a century.

Last week, the government declared that it thought the nation was in a state of deflation, and urged the bank to take measures to combat falling prices.

The bank also said that it expected conditions for fixed business investment to remain weak. It blamed this on the fact that "corporate profits remain at a low level and the sense of excessive capital stock is strong," but did not outline any further measures to tackle this problem.

Despite improvements in the manufacturing sector, Japan has failed to translate government policies into growth in consumption and conditions for households.

Japan has suffered dour economic circumstances since the shock waves from the credit crisis that started in the United States reached its shores last year. (PNA/Xinhua) LBV/utb


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