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- Japan may already be in recession - former top BOJ economist
Japan may already be in recession - former top BOJ economist
Japan's economy may already be in mild recession and will rebound only modestly next year, forcing the central bank to maintain its huge stimulus despite the rising costs, former Bank of Japan executive Hideo Hayakawa said.
Given its dwindling ammunition, the BOJ is likely to hold off on expanding stimulus unless an external or market shock deals a more severe blow to the economy, said Hayakawa, who retains close contact with incumbent central bank policymakers.
Prolonged economic stagnation, however, will also prevent the central bank from normalising crisis-mode policies any time soon, he said.
"With inflation very distant from the BOJ's 2% target, the BOJ won't be able to dial back stimulus any time soon," Hayakawa said.
"The best it can probably do is to 'stealth' normalise," or to continue quietly tapering asset purchases, he told.
While Japan's economy is expected to rebound next year, any pick-up will be modest as lingering overseas uncertainties and slow wage growth weigh on exports and consumption, he said.
Capital expenditure is also unlikely to strengthen much as many firms already spent years ramping up spending, he added.
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