(Kanagawa Shimbun: October 20, 2015 – p. 12)
On Oct. 19, the Bank of Japan (BOJ) released its Regional Economic Report ([a quarterly report commonly referred to as] the Sakura Report) for October. Compared with the last assessment in July 2015, all nine regions reported that their assessments regarding the pace of economic improvement remained unchanged. Private consumption and business fixed investment were firm [during the quarter]; however, economic recovery was at a standstill as exports and production were sluggish due to the slowdown in China and other emerging economies. This is the first time in five quarters – since the July 2014 report – that all regional assessments were unchanged from the previous report.
In remarks given at the Bank’s branch managers’ meeting held before the announcement of the report at the BOJ’s Tokyo head office, Governor Haruhiko Kuroda said that the Japanese economy “has continued to recover moderately although the impact of the slowdown in emerging economies is evident.” He went on to say that he was ready to introduce additional monetary easing if the target of 2% inflation were to prove difficult.
Each region’s assessment in the Sakura Report remained unchanged from July, with the Tokai region “recovering steadily,” the Hokuriku and Kinki regions “recovering,” and the remaining six regions continuing to recover moderately.
For the three regions of Kanto-Koshinetsu, Tokai, and Kinki, it was noted that exports and production have been affected by the slowdown in emerging economies. However, lowering the economic assessment was deemed unnecessary because private consumption is recovering on the back of steady improvement in the employment and income situation and because business fixed investment is recovering.
Turning to individual factors, [industrial] production in the four regions of Kanto-Koshinetsu, Tokai, Kinki, and Kyushu-Okinawa was revised downward to “more or less flat” or “the pace of increase has decelerated somewhat.”
Business fixed investment was revised upward in the three regions of Chugoku, Shikoku, and Kyushu-Okinawa, while business fixed investment in Tohoku was downgraded. For the Tokai region, home to many automakers, business fixed investment was assessed as “increasing significantly.” Housing investment was revised upward, being assessed as “picking up” for all regions, except Hokuriku.
Since the April 2015 report when the impact of the increase in the consumption tax had subsided, the regions have raised their overall assessment one after the other in the Sakura Report. In the July report, Hokkaido indicated an acceleration in its pace of improvement while the other eight regions reported that economic conditions remained unchanged. (Related article follows.)