BoJ governor Haruhiko Kuroda says Japan's economy is likely to head toward a sustainable growth path as global trade and manufacturing activity pick up. David Pollard asks if he's right to think so.
It was an upbeat assessment. Japan heading for sustainable growth as trade and manufacturing pick up. If there was also a hint of a 'but' from the Bank of Japan governor. (SOUNDBITE) (English) BANK OF JAPAN GOVERNOR, HARUHIKO KURODA SAYING: "Top priority for macro economic policy, continue to overcome deflation." Deflation is an old enemy for Japan. A trade war could be a new one that Shinzo Abe is keen to avoid - with an early overture to his new US counterpart. (SOUNDBITE) (Japanese) JAPANESE PRIME MINISTER, SHINZO ABE, SAYING: "The Japan-U.S. alliance has been, is and will be the cornerstone of our diplomatic and security policies. I am aiming to visit the United States as soon as possible to further fortify the bond of alliance together with new President Trump." But equally there is encouragement for their bid to get the economy up to speed. Manufacturers' confidence rising for a fifth straight month to a two-and-half-year high. The mood in the service sector also improved. Though look forward - and confidence is seen slipping again. Trump's protectionism casting a future shadow - even if its principal target is China. (SOUNDBITE) (English) HEAD OF CORPORATE DEVELOPMENT, 7IM, JUSTIN URQUHART STEWART, SAYING: "Japan finds itself quite literally in the middle between China and America. And if there are going to be trade issues and geopolitical issues, then Japan could find itself in a very difficult position. But for the short term, those confidence figures are up, that's good for the industry, good for the market. Enjoy it now. The problem comes, I suspect, when we look nine months to a year hence from here." The BoJ's next rate review is at the end of January. It held off expanding stimulus last month - and is seen doing the same next time. Unless a severe external shock threatens to undo Japan's slow recovery.