Junko Nakagawa: Economic activity, prices, and monetary policy in Japan

Speech by Ms Junko Nakagawa, Member of the Policy Board of the Bank of Japan, at a meeting with local leaders, Kochi, 7 September 2023.

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

I. Current Situation of Economic Activity and Prices

A. Economic Developments Abroad

I would like to begin my speech by talking about the current situation of overseas economies. The pace of recovery in these economies has slowed from a strong post-pandemic rebound. In its July 2023 World Economic Outlook Update, the International Monetary Fund (IMF) projected that the global economic growth rate would slow from an estimated 3.5 percent in 2022 to 3.0 percent in both 2023 and 2024 (Chart 1). While business sentiment for the services industry has improved due to the ongoing reopening of the economy, that for the manufacturing industry has been around the break-even point between improvement and deterioration.

Let me take a look at developments in overseas economies by major region. In the United States, while monetary tightening has been impacting the real estate and housing markets, private consumption and the employment situation have been resilient thus far. European economies have slowed moderately despite concern over energy supply easing, due to strong inflationary pressure stemming from the continued effects of the situation in Ukraine. In China, weakness has been seen in the real estate market and in the sectors incorporating external demand, while recovery in private consumption has been modest and the pace of pick-up in the economy has slowed.