Global Biz

Emerging economies help Japan out from depression

(Xinhua)
Updated: 2010-05-10 10:22

TOKYO - Japan's economy has been picking up mainly due to improvement in overseas economic conditions although there is not yet sufficient momentum to support a self-sustaining recovery in domestic private demand, according to the minutes released from April's two-day policy meeting by the Bank of Japan (BOJ) on Monday.

At the April 6-7 Policy Board meeting, the eight member board led by Masaaki Shirakawa, Governor of the BOJ, concurred that exports and production have been increasing mainly against a backdrop of high growth in emerging economies, the minutes revealed.

The BOJ Policy Board members agreed at the meeting that in addition to the increase in exports and production and the continuing pick-up in private consumption, business fixed investment was leveling out more clearly, the minutes said.

Highlighting the 2010 Tankan (Short-Term Economic Survey of Enterprises in Japan), improvement in business confidence continued, among not only large manufacturers but also nonmanufacturing and small firms, the members concurred.

The members added in general terms that in Japan's economy, signs of a self-sustaining recovery might have finally started to appear.

Additionally, some members in attendance expressed the opinion that the pace of recovery in advanced economies was likely to remain only moderate, as there was not yet sufficient momentum to support self-sustaining recovery in private demand and balance- sheet adjustment pressure continued to weigh on economic activity.

Regarding the U.S. economy specifically, members were of the opinion that the world's largest economy is recovering at a moderate pace, noting however that the employment and income situation remained severe.

Members agreed that the Chinese economy had continued to grow at a rapid pace, led mainly by domestic demand, and this trend was likely to continue. One member added that, although growth in bank lending and fixed asset investment had recently slowed slightly due to China's moderate policy tightening, the trend of economic growth had not changed.

As for the guideline for Japan's money market operations for the inter-meeting period ahead, members agreed that, given the above assessment of economic activity and prices, it was appropriate to maintain the current guideline that the Bank would encourage the uncollateralized overnight call rate to remain at around 0.1 percent.

The members agreed that, in the conduct of monetary policy, the Bank would continue to aim at maintaining the extremely accommodative financial environment.