MNI POLICY: BOJ Report: Regions See Recovery Broadly On Track

--BOJ: All 9 Regions Keep Econ View From April; Recovery Intact

     TOKYO (MNI) - Japan's economy continues to either expand or recover in all

nine regions, indicating that the slowdown in overseas economies hasn't filtered

through to domestic demand and the virtuous cycle from profits to spending

continue working, the Bank of Japan's latest quarterly regional economic report

shows.

     "According to assessments from regions across Japan, all nine regions

reported that their economy had been either expanding or recovering," the BOJ

said.

     "The background to this was that domestic demand had continued on an

uptrend, with a virtuous cycle from income to spending operating in both the

corporate and household sectors, although exports and production had been

affected by the slowdown in overseas economies," the report added.

     "Compared with the previous assessment in April 2019, all nine regions

reported that their assessments were unchanged. However, a somewhat increasing

number of firms were pointing to heightening uncertainties over the outlook for

overseas economies and their impacts, reflecting, for example, the U.S.-China

trade friction," the latest report said.

     The regional economic assessment is consistent with the BOJ's outline in

June, when they maintained the overall outlook, saying "Japan's economy has been

on a moderate expanding trend, with a virtuous cycle from income to spending

operating, although exports and production have been affected by the slowdown in

overseas economies."

     The key points from the report:

     TRADE FRICTION IMPACT

     --Many regions pointed out bright capital investment and production, thanks

to solid domestic demand.

     --A production machine firm said that orders have further fallen amid

concern over prolonged trade friction since May.

     --A electronic parts and device firm said a recovery of orders, which was

expected in the second half of fiscal 2019, seemed to have been delayed as a

result of the U.S. decision of imposing tariffs on the Chinese goods.

     SOLID DOMESTIC DEMAND

     --An auto-related firm said that busy time will continue due to sold

domestic demand, including the last minute surge in demand before the

consumption tax hike.

     --A chemical firm has been implementing capital investment to increase

capacity.

     --Several non-manufacturing firms said that they are actively implementing

capital investment to cope with labor shortages.

--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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