Japan's central bank upgrades assessment on 7 regional economies

The Bank of Japan (BOJ) on Thursday upgraded its assessment on seven of the nation's nine regional economies in a quarterly report that showed conditions have only remained flat in Shikoku and Kyushu-Okinawa.

The other regionsHokkaido, Tohoku, Hokuriku, Kanto-Koshinetsu, Tokai, Kinki and Chugokuall showed signs of recovery after a dour spell that started in the aftermath of the credit crisis of late 2008.

The BOJ remained cautious on the future for Japan's economy, however. "Most regions continued to point either to the low level of economic activity (Hokkaido, Tohoku, Hokuriku, and Kinki) or to differences in developments among regions, industries, or firms ( Kanto-Koshinetsu, Tokai, Shikoku, and Kyushu-Okinawa)," the bank said in its quarterly Regional Economic Report for April.

The report noted that in terms of private consumption, conditions remained severe for most regions, supporting government and BOJ concerns about deflation.

Most regions also reported that the decline in business fixed investment was beginning to slow down, although conditions remained bad for two regions. "Tohoku reported that business fixed investment had continued to decline substantially, and Tokai reported that it had remained at a low level," the report said.

On employment, the bank said the situation "remained severe in all regions, but four regions (Tohoku, Kanto-Koshinetsu, Tokai, and Chugoku) reported signs of either an improvement or leveling out. Meanwhile, six regions (Hokkaido, Tohoku, Kanto-Koshinetsu, Tokai, Chugoku, and Shikoku) reported that the ratio of job offers to applicants had improved."

Before the meeting, BOJ Governor Masaaki Shirakawa maintained his mood of cautious optimism about the nation's recent economic situation. "Although the momentum for a self-sustaining recovery in domestic private demand remains weak, our country's economy has been picking up thanks to improvements in overseas economies and various stimulus measures," the governor said.

The report also noted that there is a difference in the extent and pace of recovery for Japan's various regions. Since the economic bubble burst for Japan in the early 1990s, the nation has struggled to gain an equilibrium in economic conditions for the urban and rural populations.

In its manifesto last year, the Democratic Party of Japan (DPJ) promised to look at reforming the nation's political and economic system to give regions more power, though analysts have told Xinhua that they believed that achieving this is likely to be difficult.

In January's report on the regions, the BOJ upgraded its assessment for four regions, leaving the rest unchanged. Since then, however, signs that the economic recovery is strengthening have led both the BOJ and the government to upgrade their assessments.

Source: Xinhua