Japan's Industrial Output Revised Upward
By wchung | 31 Jan, 2025

Japan’s central bank upgraded its assessment of the world’s second-largest economy Tuesday, 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, a move that was widely expected in the market. The low rate is in place to encourage 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. The bank 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 Tuesday the economy “is likely to show clearer evidence of leveling out over time.”

BOJ Gov. Masaaki Shirakawa vowed to provide utmost effort to help the world’s second-largest economy to return to stability.

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.

“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 Bank of Japan also cautioned the economy was still facing “high downside risks” and “uncertainty stemming mainly from developments in overseas economies and global financial markets.”

Retail sales and family spending have been sluggish, and consumer prices have also declined. April’s core consumer price index, which exclude fresh food prices, slipped 0.1 percent, while the core CPI for Tokyo fell 0.7 percent in May.

“The central bank will give maximum contribution to get the Japanese economy return to a continuous growth phase under the price stability,” Shirakawa told a news conference later Tuesday. “For the time being, we must first eliminate the risk that the economy and prices will slide lower.”

Japan’s economy shrank at a 14.2 percent annual pace in the first quarter — better than first thought, but the figure still marked the worst quarterly contraction ever for the economy.

Japan’s stock market has bounced back in recent months, with the benchmark Nikkei 225 rising above the 10,000 point. But on Tuesday, it fell back on poor economic figures out of the U.S., a major export market, sliding 2.9 percent to 9,752.88.

6/16/2009 5:50 AM SHINO YUASA Associated Press Writer TOKYO