TOKYO (Reuters) - Japanese exports may be hurt if China’s economic growth slows further, some Bank of Japan policymakers warned in their rate review last month, when China’s economic woes were among key topics of debate.
The BOJ’s nine board members shared the view that overseas economies would continue to recover and keep Japan on track for a moderate economic recovery, minutes of the July meeting showed on Wednesday.
But they also said emerging economies would continue to lack momentum for the time being due largely to slowing Chinese demand, the minutes showed.
“A few members said if China’s economic growth were to decelerate further, the effect on Japan’s exports warranted close attention,” according to the minutes.
At the July meeting, the BOJ trimmed its economic growth forecast but held off on offering fresh stimulus, anticipating that a pick-up in consumption would nudge inflation toward its 2 percent target.
China shocked markets on Tuesday by devaluing its currency after a run of poor economic data, which cast doubt on the BOJ’s argument that a pick-up in exports would help Japan to emerge from an expected contraction in the second quarter.
China’s slowdown has hit oil and commodities prices, adding to headaches for the BOJ as it seeks to accelerate inflation - now around zero - to 2 percent by around September next year through aggressive money printing.
Sluggish private consumption has also tested the BOJ’s rosy scenario that rising employment and wages will encourage households to boost spending.
The board members agreed that the weakness in consumption was due to temporary factors such as bad weather, the minutes showed.
But some were less optimistic about consumption than others.
“One member said close attention was needed to the risk that rising prices of daily necessities, such as food, could hurt private consumption,” the minutes showed.
Data due out next Monday is likely to show that Japan’s economy contracted an annualized 1.9 percent in April-June due to weak exports and household spending, a Reuters poll showed.
Reporting by Leika Kihara; Editing by Chang-Ran Kim and Edmund Klamann