Naoki Tamura: Economic activity, prices and monetary policy in Japan

Speech by Mr Naoki Tamura, Member of the Policy Board of the Bank of Japan, at a meeting with local leaders, Gunma, 22 February 2023.

The views expressed in this speech are those of the speaker and not the view of the BIS.

I. Economic Activity and Prices

A. Economic Activity
1. Current Situation
I will begin my speech by talking about recent developments in economic activity in Japan. Japan's economy, despite being affected by factors such as high commodity prices, has picked up as the resumption of economic activity has progressed while public health has been protected from COVID-19. The pace of recovery had remained moderate in Japan, partly because steps to resume economic activity had been taken more cautiously than in other advanced economies; nevertheless, real GDP growth has almost recovered to levels seen before the pandemic (Chart 1).

Let me explain the current state of Japan's economy in more detail. First, a look at the household sector. Although Japan experienced the eighth wave of the pandemic this winter, the impact on private consumption has been limited compared with past cases, and private consumption continues to recover as a trend from the downturn brought about by the impact of the pandemic (Chart 2). This recovery trend has been supported by pent-up demand on the back of household savings that had accumulated during the pandemic and by the government's domestic travel discount program.