Japan's firms fret over potential hit from trade woes,
BOJ warns
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[October 18, 2018]
By Leika Kihara
TOKYO (Reuters) - Many Japanese companies
have avoided a direct hit from escalating trade frictions so far, but
they increasingly worry their business will be impacted, central bank
officials said on Thursday.
The comments are a sign the rising tide of protectionism and warnings
about global growth slowing are casting a shadow over Japan's otherwise
healthy economic recovery.
In a report scrutinizing regional economies issued on Thursday, the Bank
of Japan cut its assessment for two regions hit by natural disasters -
the most in more than two years.
Companies were worried that higher U.S. tariffs imposed on China could
trigger an inflow of cheap Chinese goods to Japan, disrupt supply chains
or hurt their profits, the quarterly report said.
"Some companies said they saw changes in Chinese demand," a BOJ official
told reporters. "Rather than the current impact, many firms voiced
worries about the effect the trade tensions could have on their future
businesses," he said.
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Data released on Thursday showed Japan's exports fell in September for
the first time since 2016 as shipments to the United States and China
declined, adding to concerns about the broadening impact of the Sino-U.S.
trade row.
A global robot group warned on Thursday that sales of industrial robots
in China, the world's biggest market, will rise this year at only about
one-third of last year's pace.
Yasuhiro Yamada, head of the BOJ's branch in Osaka, western Japan, said
many executives were feeling "a sense of uncertainty" on how trade
friction could affect businesses.
"Protectionism remains a big source of concern for manufacturers," said
Tokiko Shimizu, head of the BOJ's Nagoya branch overseeing the Tokai
region - home to auto giant Toyota Motor <7203.T> and its parts
suppliers.
Both officials said they have not heard of any firms being directly hit
by higher U.S. and Chinese tariffs, or planning to relocate factories.
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![](../images/101818pics/busine46.jpg)
Men work on the outside
of the Bank of Japan building in Tokyo, Japan January 15, 2018.
REUTERS/Kim Kyung-Hoon
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GLOOMY OUTLOOK
The BOJ's regional report and Thursday's trade data would be scrutinised
at the bank's rate review on Oct. 30-31, when it issues new quarterly
growth and inflation forecasts.
At Thursday's meeting, BOJ Governor Haruhiko Kuroda offered a slightly
more upbeat view on inflation than three months ago and maintained his
view the world's third-largest economy will sustain a recovery.
"Japan's economy is expected to continue expanding moderately," Kuroda
said.
Consumer inflation was moving around 1 percent, Kuroda added, giving a
more optimistic view on prices than when he said inflation was hovering
around 0.5 to 1 percent.
The BOJ cut its economic assessment on the quake-hit northernmost
prefecture of Hokkaido and the Chugoku western region, which saw output
disrupted by heavy rain in July.
It maintained its assessment for the remaining seven regions. It was the
first time in just over two years the BOJ cut its assessment for two or
more regions.
While the downgrades were due mostly to damage from natural disasters,
the BOJ's report said some firms fretted about the uncertain outlook
stemming from trade frictions.
"Higher U.S. tariffs for auto parts we export from China are hurting our
group's margins," a company in Hiroshima, western Japan, was quoted as
saying in the BOJ report.
"We're not seeing declines in orders from China yet, but we're worried
about future potential falls," an electric machinery maker in Osaka was
quoted as saying.
(Reporting by Leika Kihara; Editing by Chang-Ran Kim & Shri Navaratnam)
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