The Japanese economy faces three years of deflation as it claws back from its worst slump in decades, the central bank warned yesterday, even as it moved to end some of its recession-busting measures.
The Bank of Japan (BOJ) painted a slightly more optimistic picture of the outlook for economic growth in a twice-yearly report, but warned that prices would keep falling until at least the year to March 2012.
“Japan’s economy has started to pick up, and in the second half of fiscal 2009 it is likely to improve gradually on the back of improvements in overseas economies as well as the effects of economic policy measures,” it said.
But the pace of recovery is likely to remain “moderate” until late next year because it will take time for the global economy to rebound and the effect of pump-priming stimulus measures will wane, it added.
The world’s second-largest economy is set to shrink 3.2 percent in the current financial year to March before rebounding by 1.2 percent next fiscal year and 2.1 percent the following year, the Bank of Japan predicted.
Consumer prices are expected to fall 1.5 percent in the current financial year, followed by a further decline of 0.8 percent next fiscal year and 0.4 percent the following year, the BOJ said.
The BOJ said it was a “critical issue” whether the decline in prices results in a deflationary spiral that depresses economic activity.
But with the pace of deflation expected to gradually slow, that appears unlikely to happen, it added.
Earlier in the day the central bank announced that it would end some of its emergency measures to fight the financial crisis at the end of the year as Asia’s biggest economy emerges from a deep recession.
The BOJ has been tackling the credit crunch with super-low lending rates and other steps to support struggling companies, such as purchases of corporate debt, which will finish at the end of December.
Core consumer prices have now fallen year-on-year for the past seven months, although the pace of decline eased to 2.3 percent last month, after a record 2.4 percent slump in August, the government reported yesterday.
Meanwhile, the unemployment rate fell to 5.3 percent last month, the government reported yesterday, beating market expectations for an increase to 5.6 percent.
A separate survey released by the labor ministry yesterday showed there were 43 job offers for every 100 jobseekers last month, slightly up from a record low of 42 in the previous two months.
It is the first time since May 2007 that the job-offer ratio has improved from the previous month.
Household spending also gained 1 percent last month from a year earlier, increasing for a second consecutive month.
DISCONTENT: The CCP finds positive content about the lives of the Chinese living in Taiwan threatening, as such video could upset people in China, an expert said Chinese spouses of Taiwanese who make videos about their lives in Taiwan have been facing online threats from people in China, a source said yesterday. Some young Chinese spouses of Taiwanese make videos about their lives in Taiwan, often speaking favorably about their living conditions in the nation compared with those in China, the source said. However, the videos have caught the attention of Chinese officials, causing the spouses to come under attack by Beijing’s cyberarmy, they said. “People have been messing with the YouTube channels of these Chinese spouses and have been harassing their family members back in China,”
The Central Weather Administration (CWA) yesterday said there are four weather systems in the western Pacific, with one likely to strengthen into a tropical storm and pose a threat to Taiwan. The nascent tropical storm would be named Usagi and would be the fourth storm in the western Pacific at the moment, along with Typhoon Yinxing and tropical storms Toraji and Manyi, the CWA said. It would be the first time that four tropical cyclones exist simultaneously in November, it added. Records from the meteorology agency showed that three tropical cyclones existed concurrently in January in 1968, 1991 and 1992.
GEOPOLITICAL CONCERNS: Foreign companies such as Nissan, Volkswagen and Konica Minolta have pulled back their operations in China this year Foreign companies pulled more money from China last quarter, a sign that some investors are still pessimistic even as Beijing rolls out stimulus measures aimed at stabilizing growth. China’s direct investment liabilities in its balance of payments dropped US$8.1 billion in the third quarter, data released by the Chinese State Administration of Foreign Exchange showed on Friday. The gauge, which measures foreign direct investment (FDI) in China, was down almost US$13 billion for the first nine months of the year. Foreign investment into China has slumped in the past three years after hitting a record in 2021, a casualty of geopolitical tensions,
‘SOMETHING SPECIAL’: Donald Trump vowed to reward his supporters, while President William Lai said he was confident the Taiwan-US partnership would continue Donald Trump was elected the 47th president of the US early yesterday morning, an extraordinary comeback for a former president who was convicted of felony charges and survived two assassination attempts. With a win in Wisconsin, Trump cleared the 270 electoral votes needed to clinch the presidency. As of press time last night, The Associated Press had Trump on 277 electoral college votes to 224 for US Vice President Kamala Harris, the Democratic Party’s nominee, with Alaska, Arizona, Maine, Michigan and Nevada yet to finalize results. He had 71,289,216 votes nationwide, or 51 percent, while Harris had 66,360,324 (47.5 percent). “We’ve been through so
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