Business / Economy

BOJ chief expresses confidence in China's economy

(Xinhua) Updated: 2016-09-05 16:21

TOKYO - Bank of Japan (BOJ) Governor Haruhiko Kuroda said on Monday that the Chinese economy will keep growing steadily due to the positive measures taken by the government, while signaling his readiness to implement existing or yet-to-be-crafted measures to expand its monetary policy here in the face of growing market concerns.

The BOJ chief made the remarks here in Tokyo after delivering a speech regarding the expansion of the central bank's already massive stimulus program, amid mounting market concerns that the bank's monetary arsenal may be running out of ammunition.

On the Chinese economy, however, Kuroda said that for his and the bank's part, there was no sense of pessimism regarding the world's second-largest economy, and, unlike Japan's own economic situation, China's economy facing similar stagnation was highly unlikely.

He attributed China's economic growth and continued success to positive measures taken by the government to comprehensively increase domestic personal consumption and fixed asset investment, in a way that was simultaneously stable and sustainable.

Conversely, Japan's own economy essentially stalled in the April-June quarter, as the government's "Abenomics" economic policy mix failing to reverse the yen's appreciation, coupled with slumping exports, falling corporate investment and consumer spending, saw negligible growth in the quarter which largely missed economists' expectations.

The second quarter growth of Japan's economy came in less than median forecasts for between a 0.4 and a 0.7 percent expansion in the recording period, logging an annualized 0.2 percent in real terms, with the minimal growth coming on the heels of a revised 2 percent growth logged in the January-March quarter.

The weak figures have highlighted the issues the government here, under Prime Minister Shinzo Abe, is having in actualizing economic policies to reverse two decades of deflation and reinvigorate corporate and private spending, against a backdrop of a persistently strong yen, which continues to hamper the nation's key export sector, as prior and recent stimulus efforts have been ineffectual.

Pressure, thus, has been mounting on the BOJ to further expand its monetary policy and underpin the economy and market analysts widely believe that further measures will be unveiled by the central bank following its next policy meeting towards the end of this month.

Underscoring the fact that the BOJ will definitely not withdraw its current easing measures, Kuroda intimated Monday that the bank's decision to plunge its interest rate into negative territory may have impacted domestic banks' lending scope and dashed local and global sentiment towards the banking sector here, and suggested that other policy maneuvers remained on the table, although said there also remained ample room to deepen negative rates.

Not ruling out the costs of further easing, he added that the bank, if necessary, stood poised to take further drastic measures and has a range of policy options available to deploy to deal with any possible economic contingencies.

With the bank's lofty 2 percent inflation target remaining elusive and in light of the yen's persistent firmness ensuring exports remain pressured, and corporate profits not being translated into increased wages pummeling consumer and household spending as the nation tightens its purse strings, market analysts here believe the bank will likely further lower its rates, or increase its quantitative easing program this month, in bid to underpin Japan's moribund economy.

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