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Japan sees recession easing in country

JAPAN'S central bank upgraded its assessment of the world's second-largest economy yesterday, suggesting the country's biting recession may be easing.

The Bank of Japan's eight-member policy board also voted unanimously to leave its overnight call rate at 0.1 percent, as was widely expected in the market. The low rate is in place to boost lending and the flow of capital, but there is little room to cut it further.

"Japan's economic conditions, after deteriorating significantly, have begun to stop worsening," the central bank said in a statement following a two-day policy meeting. It said in a previous assessment that Japan's economy, mired in the steepest recession since World War II, has been "deteriorating."

Citing an improvement in exports and production, the central bank said yesterday that the economy "is likely to show clearer evidence of leveling out over time."

The central bank's less pessimistic assessment came after Japan's industrial output jumped a revised 5.9 percent in April, up from a preliminary figure of 5.2 percent.

Japan's key stock index last week closed above the psychologically important 10,000-point level for the first time in eight months, buoyed by optimism over a recovery in the global economy.

"The central bank's latest statement suggests that Japan's economy has emerged from the worst period thanks to recovering exports and a rise in output," said Hiroshi Watanabe, an economist at Daiwa Institute of Research.

But the BOJ also cautioned the economy was still facing "high downside risks" and "uncertainty stemming mainly from developments in overseas economies and global financial markets."

Japan's economy shrank at a 14.2 percent annual pace in the first quarter.


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