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BOJ downgrades economic outlook
TOKYO, Japan -- The Bank of Japan has downgraded its assessment of the Japanese economy for the first time in almost a year. The central bank said Wednesday that while the economy as a whole had stabilized, there was now "greater uncertainty" about a recovery. The bank pointed to the weak outlook for the U.S. economy, which it said will likely impact Japan's exports and industrial production. The bank's comments follow the release of figures last week showing the Japanese economy grew a better than expected 0.7 percent in the three months to September, from the previous quarter. (Full story) That translates into an annualized growth rate of 3.0 percent, compared with 2.6 percent in the June quarter. Export slowdown
But an export slowdown still threatens to derail a fragile economy in the world's second largest economy. A decline in U.S. consumer demand for Japanese products such as cars and electronic goods is hurting exporters. Japan is best by a host of other problems, including a jobless rate near postwar record levels, persistent deflation fears, and a struggling financial reform agenda. Economists say the momentum for policy change in Japan has stalled. On Tuesday the Bank of Japan concluded a two-day policy board meeting, at which it decided to aim for the high end of its current liquidity target, now at 15-20 trillion yen ($123-164 billion). (Full story) The BOJ has also announced it will start buying stocks from commercial banks from November 29, as a measure to help stabilize the country's rocky financial system. (Full story) In October it said it would aim to purchase about two trillion yen ($16.4 billion) worth of shares from banks up to the end of next September. 'Stabilized as a whole'In releasing its monthly report Wednesday, the BOJ said the economy had stabilized as a whole, "but there is greater uncertainty towards recovery." Its report comes as the Japanese stock market stages a mild recovery after being near the 19-year low set by the Nikkei 225 average last Thursday. The Nikkei closed 1.13 percent higher Wednesday at 8,459.62. The broader Topix, which touched an 18-year low on Tuesday, finished up 1.68 percent at 830.82. The yen is slightly weaker, trading at 122.40 to the U.S. dollar. Reuters contributed to this report.
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