--BOJ: Net exports switch to decline due to overseas slowing
--BOJ says tempo of output rises slowing significantly
--BOJ: Net exports to decline
--BOJ says recently weak yen contributing to rising prices
--BOJ says improvement in demand-supply balance slowing
--BOJ: Need to watch stock fall's impact on firms' fund-raising
By Shigeo Kodama, BridgeNews
Tokyo--Jan. 22--The Bank of Japan (BOJ) turned slightly cautious in assessing the overall economy in its January economic and financial report released Monday, citing future risks such as an expected fall in net exports.
The central bank said: "A temporary decline in exports is seen as inevitable, reflecting slowing in the overseas economy," adding, "Net exports are expected to decline partially due to expected growth in imports of products, such as consumer goods, capital goods and parts."
* * * Growth in industrial output is expected to slow amid such weakness in exports, and output is forecast to remain flat for the time being, the BOJ said.
The BOJ also said it is necessary to monitor downward risk in the economy, such as economic slowing overseas and changes in domestic and overseas markets.
The BOJ's core assessment of the economy said, "The economy continues to recover gradually, but its growth tempo is slowing due to deceleration in exports." The BOJ had said in the December report, "The economy continues to recovery gradually, albeit at a somewhat slower pace due to decelerating export growth."
The core assessments in December and January are similar, but the BOJ put more stress on decelerating exports in the January report than in the December one. Also, the BOJ dropped "somewhat" in the January report. Despite the future risk such as possible falls in net exports, the BOJ remained relatively optimistic about the future of the economy, saying, "It is highly possible that the gradual economic recovery trend led by capital investment will be maintained."
As for its assessment of current economic conditions, the BOJ upgraded its views on public investment and income conditions, saying, "The tempo of falls in public investment is slowing" and "Income conditions of households have been firm, as seen in improvement in labor demand and slight year-on-year increases in wages."
In contrast, the BOJ downgraded its views on net exports and industrial output, saying, "Net exports have turned to decline, reflecting slowing in growth of overseas economies such as the United States and East Asia," and "industrial output continues to increase, but the tempo of its growth is slowing significantly."
The BOJ made no notable change in its view on personal consumption, saying, "Although bright signs are seen in some data, recovery in personal consumption on the whole is seen as little, due to the lack of notable improvement in employment and income conditions." More