Asia

Wednesday, January 22, 2020 - 01:49

MNI POLICY: BOJ: Capex May Turn Cautious; Exports To Stay Weak


TOKYO (MNI) - The Bank of Japan warns that corporate investment may slow if profits at automobile-related goods and capital goods firms declined, according to full text of the quarterly Outlook Report published Wednesday.

"Business fixed investment, (a main pillar for an economic recovery), is expected to remain steady overall as firm investments in construction as well as in software and research and development offset weak machinery investment by manufacturers," the report said.

"However, since some weakness has continued in exports and production - particular in automobile-related goods and capital goods, both of which have a large impact on Japan's economy - due attention needs to be paid to the possibility that firms' investment stance may become cautious if profits in these sectors decline further," the report also said.

On the outlook for exports, the BOJ maintains its cautious view.

The recovery in global trade activity is expected to have positive effects on Japan's exports on the whole but "some differences are likely to remain in the export environment for different types of goods," the report notes.

"Specifically, although IT-related exports are expected to pick up, exports of automobile-related goods and capital goods in which Japan has a comparative advantage, will likely remain somewhat weak for the time being," it adds.

The report also said, auto-related exports will likely remain somewhat weak for the time being "as global automobile sales also are projected to remain weak."

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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