TOKYO – The Bank of Japan on Wednesday raised its economic assessments on all nine regions in the country due to a recovery in service consumption and production, despite looming uncertainty over impact of the Omicron variant of the coronavirus.
It is the first time since October 2013 that the views on all regions have been upgraded in the quarterly report, according to the BOJ.
The Japanese central bank said the nine areas reported economic conditions had been “picking up” or had shown “signs of a pickup.”
The report came after COVID-19 curbs were fully lifted in October, paving the way for economic activity to recover. Japan confirmed its first case of Omicron infection at the end of November and has seen the number of coronavirus cases rising in recent days, in what health experts say could be a sixth wave of the pandemic.
The latest BOJ report may not reflect the fuller impact of COVID-19 quasi-emergency measures that have been in place since Sunday on Yamaguchi, Hiroshima and Okinawa prefectures.
BOJ Governor Haruhiko Kuroda said during a virtual meeting of the bank’s branch managers earlier in the day that Japan’s economy remains in a “severe” situation but is picking up as a trend.
In the Sakura report, the view on private consumption was upgraded in all nine regions, a positive sign for the economy as domestic demand remains weak.
“The occupancy rate has been improving since last fall,” a company in the hotel industry said in the survey, but added, “There is a sense of vigilance against the Omicron variant and we cannot be optimistic.”
Under the quasi-state of emergency, dining establishments are asked to cut business hours and stop serving alcohol.
After parts shortages prompted automakers to curb output, the Tokai region where Toyota Motor Corp. has its headquarters saw increasing production, the report said.
Economists say the world’s third-largest economy likely grew in the three months to December after a slump in the preceding quarter. Higher energy and raw material prices have cast a pall over the economy as companies need to pass on higher costs to consumers, which in turn could cool consumer sentiment.
On the inflation outlook, Kuroda said the core consumer price index excluding volatile fresh food items will “likely increase moderately in positive territory reflecting higher energy prices.”
The nine regions are Hokkaido, Tohoku, Hokuriku, Kanto-Koshinetsu, Tokai, Kinki, Chugoku, Shikoku and Kyushu-Okinawa.