10 January 2007, 12:27  Japanese central banker says economy still expanding despite slowdown in US

The economy is expanding moderately and inventory adjustment in the information technology sector appears to be temporary, despite slower growth in the US, a senior official of the Bank of Japan said. "We think the Japanese economy continues to grow moderately," the director-general of the central bank's research and statistics department, Hideo Hayakawa, told an economic forum here. "The impact of slowing US economic growth on Japan appears to be limited, as Japanese exports are still growing," he said. Hayakawa warned of the lingering threat posed by inventory adjustment in the electronic parts and devices sector, saying stocks are still high and may be having some effect on output. "So we are watching it carefully. But if you look at the overall picture, the IT sector adjustment seems to be limited to domestic factors, such as mobile phone shipments, and temporary," he said. "We are concerned about it, but it is nothing to worry about seriously." He said corporate profits here were strong, but that corporate intentions to invest in factories and offices were "not showing an upward bias", which explained the slow growth in lending reported by banks. He said that in the face of globalization, high corporate earnings were not pushing up household income. "Private consumption is unlikely to grow fast, but its modest growth is nothing new," said Hayakawa.

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