BOJ Assessment:

 https://mainichi.jp/english/articles/20210114/p2g/00m/0bu/058000c

Article:

TOKYO (Kyodo) -- The Bank of Japan on Thursday maintained its economic assessments on five of the nine regions amid a resurgence of coronavirus cases as Governor Haruhiko Kuroda expects the pace of recovery to be modest.

In its quarterly Sakura report, the assessment on Hokkaido in northern Japan was downgraded due to a slowing recovery while the BOJ raised its view on the remaining three regions, Hokuriku, Shikoku and Kyushu-Okinawa.

The economy was in a "severe" situation in many regions due to the pandemic, but signs of a pickup have emerged, the BOJ said.

Ideas:

No real news here as the BOJ regularly assess different regions based on the trends in economic conditions and of course now the economic conditions related how the pandemic is affecting each region.

There might be a pickup but will it be enough? Of course any pickup is better than no pickup.

A modest recovery would be very good. But the key is how sustainable will a modest recovery be? 

And of course the BOJ is being very conservative and not being to optimistic and the Japanese economy has been up and down over the last year.

Article:

The report came amid reignited fears of a double-dip recession following a resurgence of the virus toward the end of 2020 and Japan's struggle to stem the rise.

Prime Minister Yoshihide Suga declared last week a new one-month state of emergency in the Tokyo metropolitan area, and expanded the measure to Osaka and six other prefectures on Wednesday.

Kuroda said earlier in the day that the BOJ will take additional easing steps if necessary to support the world's third-largest economy.

Ideas:

No doubt the Japanese economy in 2020 and beyond has been going through period of growth and periods of decreased growth.

Of course globally the same thing has been happening in many countries.

Whatever steps or measures are needed the BOJ needs to do what they can to keep the Japanese economy moving forward as much as possible.

Now is not the time to take a wait and see approach. Now is the time to move and act as needed as many businesses and families are not doing very good, with many businesses going under at this time.

Article:

The five regions with no assessment change include Kanto-Koshinetsu, which has Tokyo, the worst-hit among all prefectures, as well as Kinki in western Japan covering Osaka.

The fuller impact of the state of emergency, targeting 11 of the country's 47 prefectures, slated to be put in place until Feb. 7, has yet to be factored in.

The Sakura report pointed to sluggish consumption. Economists have warned that the second state of emergency will hurt private consumption, accounting for more than half of Japan's gross domestic product.

Ideas:

Sluggish consumption or spending as always been a concern of the BOJ, as they feel consumer spending it not at its potential.

But a key question, related to consumer spending, is there really a potential level needed for the economy to continue to grow at its potential/

Yes, consumer spending in Japan is about 50 percent of GPD, so in that case if you measure consumer spending and it doesn't always reach the 50 percent level, then maybe it is not where it should be.

Can the economy grow if consumer spending is only at the 45 percent level of GDP?

The need to always monitor consumer spending is an important measurement but if consumer spending dips from time to time, is that a time to panic?

And especially now with the pandemic, it should be a given that consumer is most likely not going to reach its potential as consumers not to interested in going out as spend and or not even interested in spending online for some consumers as the are worried about jobs and and their income.

Article:

The services sector, in particular, has been dealt a severe blow amid the pandemic as people stay at home and refrain from dining out. Under the latest emergency measure, restaurants and bars are asked to close at 8 p.m.

"We are normally fully booked during the New Year holidays, but it was disastrous (this year) that the room occupancy rate was below 50 percent due to the resurgence of infections and a subsequent suspension of the 'Go To Travel' campaign," an official in the hotel industry said.

"The declaration of a fresh state of emergency targeting the metropolitan area is leading to more cancellations," the official was quoted by the BOJ in the report as saying.

Ideas:

The services sector is the one area both the government and the BOJ need to help as often as possible.

Maybe for some an increase in the monthly subsidy as maybe the subsidy doesn't cover all of a restaurants expenses. 

Hotels, airlines, restaurants, travel and tourism related businesses all need help during this time, and as much as possible.

The more the better with many businesses, as they live day to day with the worry will they survive the pandemic.

Article:

All nine regions said production was either picking up or increasing, helped by a recovery in auto and semiconductor demand. But all areas cited weakness in employment and income conditions.

The latest state of emergency, covering more than half of the Japanese economy, will be effective until Feb. 7.

The country previously issued an emergency declaration over the virus in the spring of 2020. That led to a sharp economic contraction as consumption and business activity took a hit.

"The pace (of economic recovery) will likely be rather moderate while there remains a sense of alert against infections," Kuroda said during a virtual meeting of the BOJ's regional branch managers.

Ideas: 

The pandemic has affected many industries and regions differently, just like in a a regular normal economy, there are always going to be positives and negatives, as some industries do better than other.

But of course the pandemic has increased the negatives. 

The auto industry and semiconductor industries are the exceptions that seem be doing well globally.

The increased demand for semiconductors is understandable as the need for chips in phones, tablets, notebook computers have increased due to the demand for the use at home for teleworking and the increase in online classes in schools.

But the demand for cars is a little not so understood as consumers globally, are concerned about jobs and future incomes.

And at the same time, it might indicate that there might be certain segment of the global population, including domestic consumers in Japan, that have not be as affected by the pandemic as others a feel its OK at this time to buy a new car.

Article:

The pandemic has put the bank's 2 percent inflation goal further out of reach, raising the likelihood that its ultraloose monetary policy will continue for an extended period.

Kuroda said the consumer price index will likely fall "for the time being," due to the impact of the pandemic, falling crude oil prices and the government's "Go To" subsidy program to spur domestic travel demand.

The Sakura report, named after its cherry blossom-colored cover, is released every three months following a meeting of regional branch managers. The BOJ is scheduled to hold a two-day policy-setting meeting next week.

Ideas:

The BOJ 2 percent inflation goal, at this time, should not be a priority. If the BOJ is waiting on consumer spending to get back to normal it could take while, as consumer maybe are worried about jobs and future incomes, and as such are not going to be spending at their full potential for a while.

Yes, the consumer price index most likely is not going to increase in the near future and may even continue to fall and or remain where it is.

Consumers most likely now and in the near future may feel, its not the time to spend too much. Just what is needed for their daily needs and or just to replace what they really need.

But they might of course be enticed into a sale here or there or venture online to get something here or there, but not really indulge in more than this or that from time to time.

Have a nice day and be safe!