The Bank of Japan governor (BoJ) warned on Friday that the country’s economic recovery faces increasing threats from Europe’s sovereign debt woes and a slowdown in global growth, reflecting similar comments from other central banks this week.
The warning by Masaaki Shirakawa suggests the central bank, which left policy unchanged on Friday, is now less convinced that Japan’s economy will resume a moderate recovery by the end of 2011. That underlined expectations of further policy easing in the months ahead.
The Bank of Japan has maintained the economy will recover moderately, supported by reconstruction spending following the March earthquake and tsunami that tipped it into recession and the resilience of emerging markets. But it has also said it stood ready to ease policy if risks increased.
“Global growth is slowing as a trend, mainly in advanced economies. European growth is stalling as broadening debt woes start to affect its economy via worsening business and household sentiment,” Shirakawa said in a news conference. “We need to focus on downside risks to Japan’s economy given uncertainties in overseas developments and unstable currency and other market moves,” he said. ( From The Gulf Today )