August 25, 2021

This is the BOJ Policy Makers' Warning Against Japanese Economic Uncertainty

 The policymaker of the Central Bank of Japan (BOJ) warned in his speech today that the economy is still in dire straits and the outlook is highly uncertain with risks leaning towards a downturn.

Toyoaki Nakamura who was speaking during a virtual meeting with local business leaders in Miyazaki Prefecture, also told that the resurgence of coronavirus cases could lead to a slowdown in the increase in demand.

Nevertheless, he expects that economic activity will recover when the effects of the Covid-19 pandemic subside again, with increased growth from strong global demand and a recovery in capital spending.

In the meantime, he also said inflation tended to increase gradually as the economy recovers.

As more countries in Southeast Asia enter tighter sanctions, the world is now facing the challenge of a shortage of semiconductor chips which is causing supply constraints and being a major global risk.

Nakamura said the problem is likely to continue until the end of the year if the coronavirus outbreak cannot be curbed, which has caused many factories in Southeast Asia to continue to close.

Carmakers around the world have cut production due to the problem of chip shortages. The resurgence of Covid-19 cases in Japan, the Philippines, Thailand, Vietnam and Malaysia has led to a greater reduction and exacerbated the crisis.

Disruptions in output could hurt exports, which are the main drivers of Japan’s economic recovery, and cast doubt on the BOJ’s projection that the world’s third -largest economy will improve.