Given that, recently, slowdowns in overseas economies have continued to be observed and their downside risks seem to be increasing, it is becoming necessary to pay closer attention to the possibility that the momentum toward achieving the price stability target will be lost.
One member expressed the view that, in fiscal 2019, attention needed to be paid to such factors as the slowdown in overseas economies and the effects of the scheduled consumption tax hike, and from fiscal 2020 onward, to such factors as a peaking-out of Olympic Games-related demand and developments in the IT sector.
As for monetary policy, which will be addressed later, the Bank has been implementing monetary easing, taking account of the implication of the deceleration in overseas economies and the stronger yen on the outlook for Japan's economy and prices.
The assessment of the underlying trend as a whole is unchanged from the previous Outlook Report released in April 2019, but the slowdown in overseas economies seems to be affecting not only exports and production, as has been seen to date, but also the business sentiment of some firms as well as manufacturers' machinery investment.
The Outlook Report released on October 29, 2010 projected that, in the second half of fiscal 2010, the pace of recovery was likely to slow owing to factors including the slowdown in overseas economies and the ending of the boost from policy measures targeted at durable consumer goods, as well as the recent appreciation of the yen.
The lack of momentum in exports is temporary due to the effects of the slowdown in overseas economies for the January-March quarter appearing with a time lag; as for production, it is due to inventory adjustments of compact cars(with engine sizes of 660cc or less) as well as of iron and steel, in addition to the slowing in exports.
This decision was based on the recognition that considering the slowdown in overseas economies and the appreciation of the yen, some more time will be needed to confirm that price stability is in sight and due attention should be paid to the risk that the economic and price outlook will further deteriorate depending on developments in global financial markets and overseas economies..
Members shared the view that, among the downside risks mentioned in the Outlook Report, two had increased further:(1) the risk arising from a slowdown in overseas economies, such as the U.S. and some East Asian economies; and(2) the risk arising from developments in financial markets at home and abroad.
To explain the reasons for this downward revision, I must begin by discussing the financial crises in the United States and Western Europe as well as the deceleration in overseas economies, which are major factors responsible for the deterioration in Japan's economic conditions. Then I would like to proceed to Japan's financial conditions, the current situation of and outlook for Japan's economy, and the Bank's policy responses.
In this situation, exports are projected to remain more or less flat for the time being, due to downward pressure exerted by the slowdown in overseas economies and the past appreciation of the yen, but to moderately increase from the turn of fiscal 2017 as the effects of the slowdown in overseas economies and the appreciation of the yen are expected to gradually wane.
Business fixed investment has been steady despite the slowdown in overseas economies, and this likely is attributable to an increase in investment that is relatively less susceptible to changes in overseas demand and the business cycle, including that aimed at improving efficiency and saving labor in order to deal with labor shortage, that in research and development(R&D) for growth areas, and that related to urban redevelopment projects.
Constantly review monetary policy conduct and prepare a system for a rainy day Toward overcoming deflation and strengthen medium- to long-term growth potential, the Bank will consistently make utmost contributions as a central bank as well as strive to continue to take appropriate policy responses with due recognition that there is a high degree of uncertainty for the time being, including the effects of a slowdown in overseas economies and the appreciation of the yen.
海外経済の減速一方で、海外の景気そのものはどうなるだろうか?
Foreign economies' slowdown On the other hand, how is the world's economy doing?
日本においても、海外経済の減速を受けて停滞感が強まっています。
In Japan, the impact of the deceleration of overseas economies is generating a growing sense of sluggishness.
先行きの設備投資は、当面、海外経済の減速の影響から幾分減速すると見込まれる。
Business fixed investment was likely to decelerate somewhat for the time being, reflecting the effects of the slowdown in overseas economies.
第1に、海外経済の減速が長期化し、強い先行き不透明感に覆われていたという点です。
First, the outlook for overseas economies had been highly uncertain due to their prolonged deceleration.
とくに、海外経済の減速の影響は、半導体製造装置などIT関連財の輸出動向に顕在化しつつあります。
The effects of the slowdown in overseas economies are particularly apparent in exports of IT-related goods such as semiconductor manufacturing equipment.
Against the background of the slowdown in overseas economies, many members pointed out that Japan's exports and production in export-related industries continued to decline.
One member pointed out that, if the deceleration and downturn in overseas economies became evident, developments in fiscal and monetary policies in each economy would be important.
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