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Q&A with Governor of Bank of Japan: â€œOverall Recovery for Disaster-Stricken Area Will Take Timeâ€
In June 17th coverage by Kahoku News, Bank of Japan Governor Haruhiko Kuroda spoke in regard to the economic conditions of the disaster sites of the Great Eastern Japan Earthquake. Among other comments, he stated that “recovery in all aspects will take time.” The main exchanges are as stated below.
What are your impressions of the disaster sites?
“Restoration and recovery is progressing substantially. Having been supported by demands for recovery, of all regions in Japan, Tohoku’s economic activity is progressing forward the most, but the reality is also that [demands for recovery are] are placing a disproportionate emphasis on some sectors in the construction industry and so on. Recovery of the economy in all aspects will take time.”
How do you view the current situation of Tohoku’s financial institutions? “Loans in the form of support for the recovery effort have increased, but while growth in deposits has become even greater than before, the loan-to-deposit rate is declining. Financial institutions’ core business is lending. In the long-term, [financial institutions’] earnings may not even increase.”
Two months have passed since the adoption of large-scale credit expansion. “In May, the US’s long-term interest rates have risen rapidly, along with Japan’s. However, in June flexible open-market operations were conducted, and the degree of variability has evened out.
What is your outlook on the current situation and the future for Japan’s economy?”
“Consumption is steady and home investment is also strong. Business investment in non-manufacturing is also strong, but investment in manufacturing is insufficient. For the recovery of business investment in the manufacturing industry and a really full-scale increase on exports, it will take time. As for investing and financial policy, if a boost in Japan’s economy takes place through growth strategy becoming effective in the future, [favorable] results will show.”