The Bank of Japan indicated that there are many downside risks facing the pace of economic recovery in the summary of views issued by the bank at its meeting in April. The most prominent points mentioned in the report are as follows:
The Japanese economy is likely to remain in a difficult situation in the coming period.
The recession of the economy in the short term caused by the coronavirus pandemic may not affect medium- and long-term economic conditions.
The economy is expected to gradually improve once the pandemic is over.
The prices of goods and services may remain high for some time before stabilising.
The Japanese economy is facing a sharp downturn similar to the Great Depression of 1930.
We must take steps that focus on providing liquidity, as well as protection from further deterioration in economic conditions.
We are closely monitoring the financial system, considering the risks that may stand in the way of Japanese bank loans.
There is scope for more coordination between monetary and fiscal policy.
The effectiveness of our current policy must be reviewed to prevent Japan from slipping back into deflation.
