The Bank of Japan on Monday retained its assessments on eight of nine regional economies, with some companies becoming wary of the political and economic outlook in the United States and Europe.
The central bank’s quarterly report came as geopolitical risk is deemed to be on the rise after U.S. military strikes on Syria last week, with uncertainty surrounding U.S. President Donald Trump’s economic policies lingering.
Political instability in Europe has also made more Japanese firms reluctant to beef up production and investment, the report suggested.
“As the situation is unclear in the United States and Europe, we have refrained from bolstering production,” a machine manufacturer in the Kanto-Koshinetsu region, including Tokyo, was quoted as saying by the BOJ in the report.
As for the U.S. economy, concerns have been mounting over whether Trump will be able to implement his key economic policies after his failure to repeal his predecessor Barack Obama’s healthcare law last month.
The central bank, meanwhile, upgraded its assessment on the economy in the Hokuriku region on the Sea of Japan as the impact of the Hokuriku Shinkansen Line bullet train service directly linking the area to the capital flowed on.