Kuroda offers optimistic view on Japan economy
Tokyo threatens India with WTO on steel
DAVOS: Bank of Japan Governor Haruhiko Kuroda said yesterday the country’s economy is likely to head toward a sustainable growth path as global trade and manufacturing activity pick up. But he added that Japan had yet to address major challenges, which were to heighten inflation expectations and prod firms to raise wages.
“Our top priority for macro-economic policy continues to be to overcome deflation,” Kuroda told a session of the World Economic Forum. “Firms have remained cautious of wage increases, which is one reason why inflation hasn’t been gathering momentum,” he said.
Experience with decades of deflation had made inflation expectations among the Japanese public adaptive, or heavily influenced by past and underlying price growth, he added.
Still, Kuroda said Japan’s economy was likely to expand 1.5 percent both in the current fiscal year ending in March, and the following year, thanks to a rebound in global demand.
“One notable change since the second half of last year is a global pick-up of manufacturing and trade, which have been sluggish for quite a while since the global financial crisis,” Kuroda said. “Japan’s economy has shown clear signs of recovery in exports and industrial production,” he said.
Kuroda’s optimistic comments on recovery prospects suggest the BOJ will maintain its upbeat economic and price forecasts when its nine-member board conducts a quarterly review of projections on Jan. 30-31. The growth projections Kuroda offered are higher than the BOJ board’s median forecasts of 1.0 percent expansion this fiscal year and 1.3 percent the following year. It is rare for a BOJ governor to offer specific growth projections that vary from the BOJ board’s median forecasts ahead of the quarterly forecast review.
Trump era
Japan is threatening to take India to the WTO over restrictions that nearly halved its steel exports to the South Asian nation over the past year, a step that could trigger more trade spats as global tensions over steel and other commodities run high.
Such action is rare for Japan. The world’s second-biggest steel producer typically tries to smooth disputes quietly through bilateral talks, but with global trade friction increasing, Japan’s defence of an industry that sells nearly half of its products overseas is getting more vigorous. Besides concern over India’s protection of its domestic steel industry, Japan is also worried about the more rough and tumble climate for global trade being engendered by incoming US President Donald Trump, and feels it must make a strong stand for open and fair international markets.—Agencies