Tokyo: The Japanese economy is likely to decelerate in 2023 in the aftermath of slowdowns in overseas economies, Development Bank of Japan Chairman Yasushi Kinoshita said in a recent interview.

“The Japanese economy will also slow down amid the global economic downturn,” the head of the government-backed lender said.

Recent projections by the International Monetary Fund have highlighted deterioration in the U.S., European and Chinese economies.

“I wouldn’t say that I’m pessimistic (about the Japanese economy), but the situation requires a close watch,” Kinoshita stressed.

The DBJ chief said that the domestic economy was “solid” in 2022, reflecting strong corporate earnings thanks to the yen’s weakening. Citing a DBJ survey, he noted that corporate capital spending is projected to recover to levels before the novel coronavirus pandemic.

Still, Kinoshita warned that the yen’s depreciation could have negative effects on the Japanese economy in the long term as a weaker yen makes acquisitions of foreign companies by Japanese firms more expensive.

On decarbonization, viewed as a growth field for the Japanese economy, he said the DBJ will become a “catalyst” to pump necessary funds.

He suggested that the DBJ will play an aggressive role in attracting private-sector funds into projects aimed at achieving carbon neutrality, partly though a fund it has jointly established with regional banks.

On the Bank of Japan’s massive monetary easing policy, Kinoshita said it is certain that the policy has helped stabilize the Japanese economy, making the yen weaker, boosting corporate earnings and lowering the jobless rate.

Looking ahead, he said that the BOJ has to head for an exit from the easing policy.

To avoid such an exit having negative impact on the economy, Kinoshita said, “It’s important for monetary and fiscal authorities to communicate even more closely.”

JIJI Press