The central banks of Japan and Australia yesterday reported signs of improvement in their economies, but investors fretted that a global recovery was some way off after weak data from Europe and the US.
The Bank of Japan held its interest rate at 0.1 percent and upgraded its economic assessment for the second straight month, as rising output and exports raise expectations the worst is over in Japan’s deepest recession since World War II.
Bank of Japan (BOJ) Governor Masaaki Shirakawa said at a news conference in Tokyo that the economy’s improvements were because of temporary factors such as economic stimulus measures and there was no guarantee that a recovery would be sustainable.
PHOTO: AFP
“Although there has been some optimism on the economy after strong industrial output data, the BOJ is still maintaining a very pessimistic view on the economy,” said Junko Niskioka, chief economist at RBS Securities in Tokyo.
“It said the economy has begun to stop worsening, but it didn’t say it has stopped worsening,” Niskioka said.
Nonetheless, minutes from the Australian central bank’s policy meeting this month showed the bank saw hopeful signs, noting in particular a strong recovery in Chinese industrial production and improvements in other East Asian economies, including Japan.
“While some uncertainty about the durability of China’s economic recovery inevitably remained, there were reasonable grounds to expect that the Chinese economy would continue to record solid growth outcomes,” the Reserve Bank of Australia concluded.
The worst economic slump in six decades was triggered by bank failures and market turmoil that followed big losses on risky home loans when a US housing boom turned sour in 2007.
The recession has forced central banks to intervene in credit markets and there is now debate about when policymakers should retreat and cut stimulus spending.
A surge in long-term government bond yields over the past several weeks showed that financial markets fear huge sums of money poured into economies through drastic stimulus packages will ultimately fuel inflation and cripple state finances.
Asian stock markets fell, with Japan’s Nikkei down 2.9 percent for its worst one-day percentage loss in more than two months and a broad measure of shares elsewhere in Asia losing 1.8 percent, as investors worried a strong rally from March lows had run ahead of corporate prospects.
“I don’t see a lot of evidence of a really solid economic recovery. All I see is a moderation in the rate of decay,” said Frank Villante, chief investment officer at Souls Funds Management in Australia.
US stocks suffered their worst slide in a month on Monday after a report on New York state’s factory sector showed manufacturing slowing again this month after some improvement in recent months.
The euro hit its lowest level in almost a month against the dollar yesterday after the European Central Bank said euro zone lenders would probably need to write down another US$283 billion.
Adding to the gloom, data showed the 16-nation bloc shed a record 1.22 million jobs in the first quarter.
G8 finance ministers agreed over the weekend that the global economy was showing encouraging signs of stabilization and started to consider how to unwind rescue steps.
But while IMF director Dominique Strauss-Kahn said that he largely agreed with the G8 ministers’ position, he also appealed for caution in assessing the state of the global economy.
“Their stance is that we are beginning to see some green shoots but nevertheless we have to be cautious,” Strauss-Kahn said. “The large part of the worst is not yet behind us.”
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS