WORLD
BOJ Shirakawa: European Debt Woes May Lower Global Growth
Bank of Japan Governor Masaaki Shirakawa repeated this warning on Monday that the European sovereign debt crisis may depress global economic growth.
In his opening remarks to BOJ branch managers who gathered for a quarterly meeting, Shirakawa also repeated the bank`s latest view that the European problems "remain the biggest risk" to Japan`s recovery.
"High strains continue in the global financial and capital markets but the conditions have somewhat improved in the wake of six central banks` coordinated action (to provide dollars) and three-year fund-injecting operations by the European Central Bank," he said.
The governor noted that Japan`s financial system remains stable and that Japanese lenders have no funding problems.
But he added that the BOJ must pay attention to the risk that the European debt crisis will affect the Japanese economy and financial system through global financial markets.
"Uncertainty remains high regarding both economic growth and price stability in emerging and commodity-exporting countries," he said. "It is necessary to continue carefully monitoring how Japan`s economy will be affected by the uncertainty about overseas economies."
Shirakawa repeated the BOJ`s outlook presented at the last policy meeting in December that the pickup in Japan`s economic activity has paused due to the effects of the slowdown in overseas economy and of the appreciation of the yen.
But he also said Japan is expected to return to a moderate recovery path as the pace of recovery in overseas economies picks up, led by emerging and commodity-exporting economies, and reconstruction-related demand after the earthquake disaster gradually materializes.
"Exports and production have remained more or less flat in the wake of the slowing global economy as well as the flooding in Thailand," he said.
At its next policy meeting on Jan. 23-24, ,the BOJ board will review its medium-term growth and inflation outlook as well as risks presented in the bank`s semi-annual Outlook Report.
Later today at 1430 JST (0530 GMT), the BOJ will release its quarterly Regional Economic Report, equivalent to the U.S. Federal Reserve`s Beige Book, based on reports from branch managers.
In the previous report, the BOJ upgraded its views on five out of the nine regions in Japan while its assessment of four regions was left unchanged.