Japan's economy is likely to continue its moderate recovery in the coming months and risks to the outlook include the slowdown in emerging markets and Europe as well as the pace of recovery in the U.S., the Bank of Japan said in its monthly report on Thursday.
Exports are expected to remain largely flat in the near term, but are seen rising moderately once emerging markets emerge from their weakening phase, the bank said.
The BoJ expects public investment to maintain its moderate declining trend and business fixed investment to continue to rise modestly on better corporate profits.
Private consumption is likely to remain resilient with steady improvement in employment and income situation, the report said.
Housing investment is expected to continue picking up, while industrial production is likely to remain broadly unchanged for the time being and increase modestly afterwards, the BoJ said.
The bank expects producer prices to keep falling and the year-on-year change in consumer prices to be about zero percent for the time being, due to the effects of the decline in energy prices.
Financial conditions are accommodative, the BoJ said.
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