He cited the relatively buoyant foreign exchange market inflows, adequate reserves, a sustainable balance of payments position, and the containment of inflation within the BOJ’s 4-6 percent target range, as evidence of the progress being made.
And Byles said based on the latest development, “we believe the contraction in the economy is past its worst, and the outlook is for continued, albeit more gradual improvements in economic activity.”
Addressing the BOJ’s quarterly digital briefing, the BOJ governor noted that the 10.7 percent contraction in domestic growth recorded in the September 2020 quarter represented an improvement on the 18.4 percent decline for April to June 2020, and the Bank continues to project that for the full 2020/21 fiscal year, real gross domestic product (GDP) will contract in the range of 10-12 percent.
He said, however, that a partial rebound of at least four percent in economic activity is projected to commence in fiscal year 2021/22 “and could possibly be as high as eight percent if there’s strong recovery in tourism.”
“This projected growth in the fiscal year 2021/22 represents a first step in getting the economy back to levels of economic activity [predating COVID-19],” Byles added.