BOJ's Nakaso warns of China slowdown impact on exports

Mon Jul 27, 2015 2:40am EDT
 
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By Leika Kihara

KUMAMOTO, Japan (Reuters) - Japanese policymakers must be mindful of the potential negative impact that China's economic slowdown could have on Japanese exports, central bank Deputy Governor Hiroshi Nakaso said on Monday.

He also warned of the risk that an expected interest rate hike by the U.S. Federal Reserve could heighten global market volatility and hurt emerging markets vulnerable to capital outflows.

While China's economy is expected to stabilize on stimulus measures taken so far, its slowdown may be prolonged by the huge slack in output and the property market, he said.

"Even if China's economy maintained its growth rate, the main contribution would be from public investment, so the effect on Asian economies and Japan's exports warrants due attention," Nakaso told business leaders in Kumamoto, southern Japan.

Still, Nakaso voiced confidence Japan's economy can weather such global risks, and stressed that exports will emerge from the doldrums as global growth picks up.

"The slowdown in exports and output are likely temporary," he later told a news conference.

Japan's exports rose at the fastest pace in five months in June due to a pick-up in sales of cars and electronics. Though shipments to China picked up, a private factory survey showed new domestic and export orders fell in July.

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Bank of Japan Deputy Governor Hiroshi Nakaso speaks during an interview with Reuters at the BOJ headquarters in Tokyo April 9, 2015. REUTERS/Yuya Shino