The Bank of Japan maintained its cautiously optimistic assessment of the world's second largest economy in its latest monthly report, despite robust GDP data announced earlier in the week.
'Japan's economy continues to recover gradually and domestic demand is becoming firmer,' the bank said in the report, keeping the same wording as the previous report issued in April. 'Exports have been increasing substantially and business fixed investment continues its path of recovery,' the bank said.
Industrial production was increasing while the decline in household income was gradually coming to a halt, the bank said, adding private consumption was showing some positive movement.
'As for the outlook, Japan's economy is expected to gain further momentum gradually as it continues to recover moderately for the time being,' the central bank said.
The report came after the government said on Tuesday that Japan's gross domestic product for the March quarter grew a faster-than-expected 1.4% as the export-led recovery spread to domestic demand.
In the report, the central bank said overseas economies were expected to continue growing relatively fast, adding the recovery of Japanese exports, corporate investment and production were likely to continue.
'The increases in production and corporate profits are expected to exert positive effects gradually on employment and income situations,' the bank said. The bank also said commodity prices, such as the price of crude oil, were helping to push up deflation-hit Japanese price levels.
The report was issued hours after a two-day central bank policy board meeting, which decided to leave stimulative monetary policy unchanged.
