BOJ’s Amamiya voices hope of stronger recovery driven by vaccinations

FAN Editor
Bank of Japan Deputy Governor Masayoshi Amamiya speaks during a Reuters Newsmaker event in Tokyo
FILE PHOTO: Bank of Japan Deputy Governor Masayoshi Amamiya speaks during a Reuters Newsmaker event in Tokyo, Japan July 5, 2019. REUTERS/Issei Kato

July 21, 2021

By Leika Kihara

TOKYO (Reuters) – Bank of Japan Deputy Governor Masayoshi Amamiya said the economy may enjoy a stronger-than-expected rebound if coronavirus vaccinations speed up, offering an upbeat view on the country’s recovery prospects even as the pandemic weighs on consumption.

A resurgence in infections led the government to impose a new state of emergency in Olympic host city Tokyo that will last throughout and beyond the Games, dashing policymakers’ hope of a strong revival in growth during the quarter.

Amamiya said while the curbs will hurt consumption, the damage will be offset by robust exports that are boosting corporate profits and underpinning Japan’s recovery.

“While recent rises in commodity prices could increase costs, corporate profits are expected to improve against the background of improvements in domestic and overseas demand,” he told a speech on Wednesday.

The remarks underscore a dominant market view the BOJ will hold off on ramping up stimulus, even as the pandemic continues to cloud the economy’s recovery prospects.

Amamiya said strength in the corporate sector will help pull consumption out of the doldrums, as companies boost wages and give households more purchasing power.

“An uptrend in consumption will become clearer as the pandemic’s impact gradually subsides and household income rises,” he said.

“While risks to the (economic) outlook are skewed to the downside for the time being, there’s a chance economic activity may overshoot expectations if vaccinations speed up.”

The BOJ kept monetary policy steady last week and cut this fiscal year’s economic growth forecast, but maintained its view the economy is on track for a moderate recovery.

(Reporting by Leika Kihara; Editing by Chang-Ran Kim & Shri Navaratnam)

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