BOJ Kuroda offers cautiously optimistic view on economy

FILE PHOTO: Bank of Japan (BOJ) Governor Haruhiko Kuroda attends a news conference at the BOJ headquarters in Tokyo, Japan July 30, 2019. REUTERS/Kim Kyung-Hoon/File Photo

By Tetsushi Kajimoto and Leika Kihara

TOKYO (Reuters) - Bank of Japan Governor Haruhiko Kuroda offered a cautiously optimistic view of the economy, saying it would continue to improve as robust global demand lifts business sentiment.

But Kuroda warned that renewed curbs on economic activity to deal with a resurgence in COVID-19 infections were among risks to the economic outlook.

“While Japan’s economy remains in a severe state due to the pandemic’s impact, it is picking up as a trend,” Kuroda told a trust fund association’s meeting on Wednesday.

“As a whole, the recovery is being sustained as business sentiment improves for three straight quarters,” even though some service industries remain under pressure, he said.

Japan’s economy has emerged from last year’s slump caused by the pandemic, though analysts expect any recovery to be modest as slow vaccine rollouts and soft consumption cloud the outlook.

While a recovery in external demand and the effect of huge fiscal stimulus will underpin Japan’s recovery, risks were skewed to the downside, Kuroda said.

“Downside risks remain high,” including the effect of targeted curbs on activity imposed on major cities like Tokyo and Osaka to prevent the spread of the virus, he added.

The remarks suggest the BOJ will maintain or offer a slightly more upbeat view on the economy than three months ago when it releases fresh quarterly projections on April 27.

On monetary policy, Kuroda reiterated the BOJ’s stance of “patiently” maintaining its powerful monetary easing to achieve its 2% inflation target.

(Reporting by Tetsushi Kajimoto; Editing by Chang-Ran Kim and Ana Nicolaci da Costa)