The Bank of Japan has released its semiannual Outlook for Economic Activity and Prices. This report provides us with firmer evidence of Japan's economic recovery compared to the previous report in April.
Japan's economy continues to recover, having emerged from the temporary pause that began in the second half of 2004. Compared with the projection in the April 2005 Outlook for Economic Activity and Prices (the April outlook), overall economic activity has been more robust, because higher-than-expected domestic private demand has more than offset slightly lower-than-expected exports. The adjustments in production and inventory in IT-related sectors, which triggered the economy's temporary pause, appear to have run their course.
Click on the hyperlink above for the entire report, which provides further details of the economic climate, upside and downside risks, and monetary policy going forward.