The Bank of Japan on Thursday said the country’s economy was picking up due to rising exports and improvement in consumer sentiment.

“Japan’s economy is starting to recover moderately,” the central bank said after a two-day monetary policy meeting.

It was the first time the bank used the word “recover” in its economic assessment for two-and-a-half years.

“Exports have been picking up,” the bank said. “Business fixed investment has stopped weakening and shown some signs of picking up as corporate profits have improved.” “Private consumption has remained resilient, assisted by the improvement in consumer sentiment,” the bank added.

The statement came 10 days before upper house elections on July 21. Prime Minister Shinzo Abe appealed to voters to support his economic policies as he vowed to pull the world’s third-largest economy out of 15 years of deflation.

The central bank’s Tankan survey in June showed confidence among large Japanese manufacturers rose sharply for the second consecutive quarter to plus 4 from minus 8 in March. It was the first time the index had broken into positive figures since September 2011.

A positive number indicates optimists outnumber pessimists.

The bank trimmed forecasts for economic growth and inflation for the current financial year through March 2014. It expected the economy to expand 2.8 per cent, compared with a 2.9-per-cent growth estimated in April.

The bank also predicted the country’s consumer price index would climb 0.6 per cent, down from 0.7 per cent it had forecast three months ago.

The nine-member board also decided unanimously to maintain its aggressive monetary easing policy introduced in April. The bank’s governor Haruhiko Kuroda, who took office in March, has said he aims to reach 2-per-cent inflation within about 2 years.

Related Topics