Enthusiasm over Recovery

Policies of a central bank are ordinarily recognized as not affected by its domestic politics. How about Bank of Japan? Just ten days before the election of the House of Councillors, the bank announced that Japan’s economy started recovering. Leading parties that uphold current economic policies started emphasizing their policies were proved as correct, trying to get affirmative response from voters. Both the bank and leading parties are making their best to keep people’s eyes out of negative aspect of Japan economy.

In the Statement of Monetary Policy delivered after the policy-making meeting on Thursday, Bank of Japan declared that “Japan’s economy is starting to recover moderately.” It expressed the situation as “Japan’s economy has been picking up,” last month. It was the first time that the bank used the word “recovery” in these two and a half years. The main reason of improvement is because “exports have been picking up” and “industrial production is increasing moderately.” In addition, the bank assessed public investment to be increasing and private consumption has remained resilient.

Although the statement described about risks, the bank attributes most of them to external elements. “There remains a high degree of uncertainty concerning Japan’s economy,” it says, “including the prospects for the European debt problem, developments in the emerging and commodity-exporting economies, and the pace of recovery in the U.S. economy.”

The world’s common concern about Japan’s economy is not about the situation of global economy, but about the structure of itself. There is a broad skepticism on a huge amount of debt the government of Japan owes. Current administration led by Prime Minister, Shinzo Abe, has not sent much message about tackling it, because reminding the people of it might cause popularity decline. The government, at least, is worried about how the situation of economy affects the election.

The Governor of Bank of Japan, Haruhiko Kuroda, strictly denied the relationship between the policy of the bank and politics. “The conclusion of moderate recovery is naturally drawn from economic indexes,” he insisted in the press conference.

The ministry Kuroda had long been affiliated to, Ministry of Finance, has been recognized as making highly political move. Some media and economists still doubt the political intention in the term, “recovery.” The fact is that more small and middle-size businesses suffer from price hike of imported resources. Gradual inflation is harming family consumption. The point of coming election is how voters think about those negative aspects of current economy policies.