BOJ lifts economic assessments on nine regions despite spread of omicron

The Bank of Japan on Wednesday raised its economic assessments for the country’s nine regions due to a pickup in consumption and production of services, despite uncertainty over the impact of the omicron variant of the coronavirus.

This is the first time since October 2013 that views on all regions have improved in the quarterly report, according to the BOJ.

Japan’s central bank said all nine zones reported economic conditions had “improved” or showed “signs of recovery.”

The report came after COVID-19 restrictions were completely lifted in October, paving the way for economic activity to resume. Japan confirmed its first case of omicron infection at the end of November and has seen the number of coronavirus cases increase in recent days, which health experts say could be a sixth wave of the pandemic.

The latest BOJ report may not reflect the fuller impact of the COVID-19 near-emergency measures that have been in place since Sunday in Yamaguchi, Hiroshima and Okinawa prefectures.

BOJ Governor Haruhiko Kuroda told a virtual meeting of the bank’s branch managers earlier in the day that the Japanese economy remains in “serious” condition but is recovering as a trend.

In the Sakura report, the view on private consumption was improved in all nine regions, a positive sign for the economy as domestic demand remains weak.

“The occupancy rate has improved since last fall,” a hotel industry company said in the survey, but added: “There is a sense of vigilance against the omicron variant and we cannot be optimistic. “

As part of the near-state of emergency, catering establishments are urged to reduce opening hours and stop serving alcohol.

After parts shortages prompted automakers to cut production, the Tokai area, where Toyota Motor Corp. at its headquarters, saw production increase, according to the report.

Economists say the world’s third-largest economy likely grew in the three months to December after a recession in the previous quarter. Rising energy and commodity prices have brought the economy to a halt as companies have to pass the higher costs on to consumers, which in turn could dampen consumer sentiment.

Regarding the inflation outlook, Kuroda said the consumer staples index excluding volatile fresh food “is likely to rise moderately into positive territory, reflecting rising energy prices.”

The nine regions are Hokkaido, Tohoku, Hokuriku, Kanto-Koshinetsu, Tokai, Kinki, Chugoku, Shikoku and Kyushu-Okinawa.

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