Monthly Economic ReportExecutive Summary( dec 2024 )

(Provisional translation)

(Assessment of the current state of the Japanese economy)

  The Japanese economy is recovering at a moderate pace, although it remains pausing in part.

• Private consumption shows movements of picking up, although it remains pausing in part.
• Business investment shows movements of picking up.
• Exports are almost flat.
• Industrial production is flat.
• Corporate profits are improving as a whole, although the pace has become moderate.
  Firms' judgments on current business conditions are improving.
• The employment situation shows movements of improvement.
• Consumer prices have been rising recently.

  Concerning short-term prospects, the economy is expected to continue recovering at a moderate pace with the improving employment and income situation, supported by the effects of the policies. However, slowing down of overseas economies is downside risk of the Japanese economy, including the effects of continued high interest rate levels in the U.S. and Europe, and the lingering stagnation of the real estate market in China. Also, full attention should be given to the effects of price increases, future policy trends in the U.S., the situation in the Middle East and fluctuations in the financial and capital markets.

(Policy stance)

  To ensure the overcoming deflation, the Government will make effort to implement a “Growth-Oriented Economy Driven by Wage Increases and Investments”, standing on the principle of “Economy is the foundation of public finance”.

  To this end, the Government will promptly implement the “Comprehensive Economic Measures to Foster the Safety and Security of Citizens and Sustained Growth－Increasing Current and Future Wages and Incomes for All Generations－” (Nov 22nd, Cabinet decision) and the FY2024 supplementary budget. Moreover, the Government will compile the FY2025 budget in light of the “Basic Principles of FY2025 Budget Formulation” (December 6th, Cabinet decision) and the “Fiscal 2025 Economic Outlook and Basic Stance for Economic and Fiscal Management” (to be approved).

  The Government and the Bank will continue to work closely together to conduct flexible policy management in response to economic and price developments.

  The Government expects the Bank of Japan to achieve the price stability target of two percent in a sustainable and stable manner, while confirming the virtuous cycle between wages and prices, by conducting appropriate monetary policy management in light of economic activity, prices and financial conditions.