Though Bank of Japan Gov. Haruhiko Kuroda played up the positive at Thursday’s news conference, economic indicators point to a foundering economy that calls his strategy and his unshakable confidence into question.
The average estimate of 15 private-sector research institutes puts annualized gross domestic product growth for the January-March quarter at just 0.35%. Excluding a 1.2 percentage-point boost from the extra day caused by the leap year would leave growth in negative territory for a second straight quarter, with GDP having shrunk 1.1% in the October-December period.
“Even though growth looks positive on the surface, the economy’s actually weak,” Yoshiki Shinke of Dai-ichi Life Research Institute said.
All eyes are on preliminary GDP data for the quarter, to be released by the Cabinet Office May 18. The data will be a key factor in the government’s decision on whether to raise the consumption tax to 10% in April 2017 as planned.
Kuroda, speaking after the bank’s policy board meeting, asserted that the BOJ can engineer 2% inflation, arguing that growing incomes continue to promote consumer spending. But price and consumption data tell a different story.