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

--BOJ: 1 Out of 9 Regions Up Economic Assessment From July

--BOJ: 8 Regions Keep Econ View From July; Recovery Intact

By Hiroshi Inoue

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

nine regions, indicating limited impact from the sustained slowdown in overseas

economies on domestic demand, the Bank of Japan's quarterly regional economic

report showed Tuesday.

     "According to assessments from regions across Japan, all nine 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, production, and business

sentiment had been affected by the slowdown in overseas economies," the central

bank added.

     "Compared with the previous assessment in July 2019, the Hokkaido region

revised up its assessment, whereas the other eight regions reported that their

assessments were unchanged," the BOJ report said.

     "Meanwhile, there were many reports from firms regarding their views on

overseas demand, their fixed investment stance, and the effects of the October

2019 consumption tax hike," the report noted.

     The key points from the report:

     --Many regions said that capital investment was increasing or was flat at

high levels and private consumption was increasing or recovering.

     OVERSEAS DEMAND

     --An automobile-related firm said demand for automobiles in China remained

weak and the company is worried over a further drop in demand amid the prolonged

trade friction.

     --A machine firm said adjustments of IT-related goods are progressing, but

noted the supply-demand for IT-related goods eased and it isn't optimistic about

the outlook.

     CAPITAL INVESTMENT

     --An electronic and device firm said that it plans to implement capex to

increase capacity in the current fiscal year.

     --A paper and pulp firm said that it will actively implement capex to renew

old equipment.

     --One food and drink company said the capital investment in the current

fiscal year seems to rise on year due to software investment to cope with the

consumption tax hike.

     LAST-MINUTE BUYING

     --Department and supermarket stores said the front-loaded rise in demand

before the tax hike and the drop after the tax hike was smaller than the

previous tax hike in 2014.

     --A electrical appliance firm said sales of household appliance increased.

     POST-HIKE SPENDING

     --One retail dealer said that the last-minute buying was small and the

post-hike drop in sales will not be big.

     --An automobile firm said the sales of automobile before the tax hike was

limited and sales after the tax hike will not fall sharply.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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