BOJ sees Japan's economy shrink in H1
Source: Agencies |
April 25, 2011, Monday
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Print Edition
Print Edition
BANK of Japan Governor Masaaki Shirakawa said the country's economy will likely shrink in the first half of 2011 due mainly to stalled output in the wake of the March 11 earthquake and tsunami, the Wall Street Journal reported on Saturday.
"We are now expecting production and GDP will decline in the first quarter and the second quarter," Shirakawa said in the interview conducted on Friday, echoing the views of most private-sector economists who also see a first half contraction.
The focus is now on how quickly the Japanese economy will return to growth. This largely depends on when supply chain disruptions will ease and to what degree power shortages could affect factory output during the peak summer period.
Shirakawa was quoted as saying supply constraints would likely continue at least until August before recovering.
"Once supply capacity is recovered, then the Japanese economy is moving back to the original growth path," Shirakawa said.
The BOJ may delay further easing of monetary policy next week but will be ready to act if the quake's damage threatens Japan's return to a moderate economic recovery.
In a twice-yearly outlook report to be issued at next week's rate review, the BOJ will cut its economic forecast for the current fiscal year, which began on April 1, from its January projection of 1.6 percent growth to reflect the impact of the quake, according to sources familiar with the BOJ's thinking.
But many in the BOJ agree with the dominant market view that Japan will avoid a contraction for the full fiscal year as growth may pick up from autumn.
"We are now expecting production and GDP will decline in the first quarter and the second quarter," Shirakawa said in the interview conducted on Friday, echoing the views of most private-sector economists who also see a first half contraction.
The focus is now on how quickly the Japanese economy will return to growth. This largely depends on when supply chain disruptions will ease and to what degree power shortages could affect factory output during the peak summer period.
Shirakawa was quoted as saying supply constraints would likely continue at least until August before recovering.
"Once supply capacity is recovered, then the Japanese economy is moving back to the original growth path," Shirakawa said.
The BOJ may delay further easing of monetary policy next week but will be ready to act if the quake's damage threatens Japan's return to a moderate economic recovery.
In a twice-yearly outlook report to be issued at next week's rate review, the BOJ will cut its economic forecast for the current fiscal year, which began on April 1, from its January projection of 1.6 percent growth to reflect the impact of the quake, according to sources familiar with the BOJ's thinking.
But many in the BOJ agree with the dominant market view that Japan will avoid a contraction for the full fiscal year as growth may pick up from autumn.
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