BOJ: Kuroda and Japan Economy:

https://www.yahoo.com/finance/news/bank-japans-kuroda-offers-bleak-084643316.html

Article:

TOKYO (Reuters) - Bank of Japan Governor Haruhiko Kuroda on Wednesday said the coronavirus outbreak could inflict big damage on the economy, stressing the central bank's readiness to take "appropriate action" to underpin a fragile recovery.

Japan's economy had been expected to recover in the current quarter, but the epidemic has hurt exports and consumption through a decline in Chinese tourists, Kuroda told parliament.

"If the epidemic is prolonged, it could also affect production," he said. "We need to be mindful that the impact from the outbreak could be big," Kuroda said, adding that consumer sentiment is already being hurt from the health crisis.

The remarks underscore a growing concern among BOJ policymakers over the widening fallout from the epidemic, which is hurting an economy already reeling from last year's sales tax hike and natural disasters that disrupted production.

Heightening fears of recession are piling pressure on the BOJ to follow in the footsteps of other central banks and ramp up stimulus as early as this month's rate review.

Comments and Ideas:

Yes, under normal circumstances and situations the economy most likely would recovered from the Q3 and Q4 situations related to the typhoons, the sales tax increase, and the continued global trade challenges.

But now the with virus situation, and especially with many Japanese businesses having production in China, the situation has become more challenging to say the least.

Article:

While robust capital expenditure and government spending continue to underpin growth, the fate of Japan's recovery depends largely on how long it takes to contain the epidemic, Kuroda said.

"We will carefully watch economic and market developments, and take appropriate action as needed," he said.

Over 60% of Japanese companies said their earnings were being hurt by the coronavirus outbreak, a survey showed on Wednesday, adding to market fears the epidemic could tip the world's third-largest economy into recession.

But the central bank's policy decision could be a close call as some at the BOJ feel monetary policy can do little to eradicate fears about the epidemic that are keeping people at home, they said.

Prime Minister Shinzo Abe told the same parliament committee that the government will take steps to protect jobs and mitigate the hit to the economy from the outbreak.

"We'll closely watch global economic developments, and take sufficient and necessary economic and fiscal policies" to address risks, Abe said.

Comments and Ideas:

A combination of capital spending and government spending is very important in any economy but in this case it is even more important. The Japanese government can't just let the economy be and hope hope it will fix itself over time. Government spending needs to be deep and often.

Yes the BOJ has said in the past it doesn't think it has enough tools or the correct economic tools to sustain the economy in this situation if gets worse. There obviously has to be a combination of monetary and fiscal stimulus packages and more than once. Maybe two or three times over the next year. 

The most important variable in any economy is jobs. Jobs, jobs, jobs, is the critical element. As with jobs and continued growth in jobs and wages etc. consumers will then spend, business will be happy and produce and spend more.

Have a nice day and be safe out there!

© 2020, Tom Metts, all rights reserved