Japan’s central bank expects that the country will not slide into stagflation, a period when prices are soaring while the economy refuses to grow, despite threats of skyrocketing energy prices.
Seiichi Shimizu, head of the Bank of Japan’s (BOJ) monetary affairs department, said that consumer prices will “clearly accelerate” as the Ukraine crisis pushes prices of energy and commodities up.
“But we don’t expect Japan to face a stagflation-like situation, defined as a combination of rising inflation and a contraction in economic growth,” Shimizu told parliament.
Japan’s economy is expected to recover as the easing of COVID-19 restrictions bring consumer activity back to normal levels, Shimizu said, adding that solid demand for exports will support that recovery.
Meanwhile, Japan’s economic recovery in last year’s final quarter was softer than initially seen.
The revised gross domestic product released by the Cabinet Office on Wednesday showed Japan grew by 4.6 percent, lower than the preliminary reading of 5.4 percent released last month.
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