The Bank of Japan (BoJ) left a key assessment of the economy unchanged today for the third straight month but warned of a slowdown in export-led growth due to the global economy.
In a rare move, the bank also said it was imperative to monitor the disposal of non-performing loans at Japanese banks, cited as a root cause of the nation's economic malaise.
"Japan's economy has stabilised as a whole, but clear signs of recovery have not yet been observed partly due to large uncertainty regarding the global economy," the central bank said in its October report. "Exports continue to increase, albeit at a slower pace," it said.
Exports have lifted the world's second-largest economy from recession, sparking fresh activity at factories and helping to boost gross domestic product by 0.6 per cent in the three months to June from the previous quarter.
But the BoJ warned orders from overseas would decelerate in the coming months also hurting fresh industrial production.
"The pace of improvement in business sentiment has become gradual and the improvement for the immediate future is also expected to be small partly due to large uncertainty regarding the global economy," the report predicted.
The central bank's quarterly Tankan survey of corporate sentiment released at the start of the month showed business pessimism had declined slightly in Japan but the outlook remained clouded by heavy debts, flagging sales and concerns over the US economy.
AFP