Asia-Pacific

Japan's economy to improve: BOJ

(Xinhua)
Updated: 2010-03-18 16:43

TOKYO - Japan's economy is picking up and economic conditions are likely to continue improving, said the Bank of Japan (BOJ) in a report on Thursday.

However Japan's central bank maintains that there is "not yet sufficient momentum to support a self-sustaining recovery in domestic private demand," although on the whole exports and production have been increasing.

Private consumption, which accounts for roughly 60 percent of Japan's economy, is picking up, said the BOJ, mainly due to policy measures, despite the continued severe employment and income situation.

Meanwhile, compared with last month, stock prices have risen, while the yen's exchange rate against the US dollar and long-term interest rates have remained at more or less the same levels, the BOJ indicated.

In broad terms the financial environment, with some lingering severity, has continued to show signs of improvement, Thursday's report surmised and with regard to credit supply, although many firms still see financial institutions' lending attitudes as severe, firms as a whole regard the situation as improving.

According to the BOJ, the decline in bank lending on a year-on- year basis is partly due to its high growth a year ago. The amount outstanding of corporate bonds has exceeded the previous year's level.

Although many firms, mainly small ones, still see their financial positions as weak, on the whole firms' financial positions have continued to improve, the central bank said.

The central bank's report comes on the back of two days of policy meetings, held on Tuesday and Wednesday, at which the bank decided to increase its three-month lending facility for banks to 20 trillion yen ($222 billion) and to maintain it's ultar-low overnight interest rate at 0.1 percent.