Shinichi Uchida: Japan's economy and monetary policy

Speech by Mr Shinichi Uchida, Deputy Governor of the Bank of Japan, at a meeting with local leaders, Nara, 8 February 2024. 

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

Central bank speech  | 
09 February 2024


It is my pleasure to have the opportunity today to exchange views with leaders in administrative, economic, and financial areas in Nara Prefecture. I would like to take this chance to express my sincere gratitude for your cooperation with the activities of the Bank of Japan. Before hearing from you, I will explain Japan's economic activity and prices, as well as the Bank's conduct of monetary policy.

I. Economic Developments

I would like to first express my sorrow for the lives lost in the Noto Peninsula Earthquake and extend my condolences to all those affected. I hope that restoration and reconstruction will progress as swiftly as possible. Regarding the economic impact of the earthquake, in terms of production, many factories were damaged, but thanks to the efforts of people on the ground, a growing number of these are resuming operations. There are many factors that continue to warrant close attention, including the impact on local tourism and consumer sentiment. The Bank will do its utmost to maintain financial functioning and ensure smooth settlement of funds, while closely monitoring the local situation through its Head Office, branches, and local offices, including the Kanazawa Branch.

Let me start with Chart 1. Japan's economy has recovered moderately. It is expected to grow at a pace above its potential growth rate, with the projected growth rates being at 1.8 percent for fiscal 2023, 1.2 percent for fiscal 2024, and 1.0 percent for fiscal 2025.

Looking at Chart 2, corporate profits have been at record-high levels for both large firms and small and medium-sized firms. In this situation, business fixed investment plans indicate that the year-on-year rate of increase in investment will be 12 percent for fiscal 2023, mainly led by investment to address labor shortages, that related to decarbonization, and digital-related investment.