BOJ’s Ueda Says Inflation Is Reviving Japan Investment

(MENAFN) Bank of Japan Governor Kazuo Ueda said Friday that the return of moderate inflation is reviving corporate risk appetite and fueling domestic investment in Japan.

Speaking at the Michel Camdessus Central Banking Lecture at the International Monetary Fund, Ueda noted that post-pandemic business fixed investment has finally surpassed its early-1990s peak.

Bank lending in Japan has recently grown by more than 5%, its fastest pace in three decades, as corporate borrowing recovers, he said.

A Bank of Japan survey found that more than 70% of firms invested more actively at home in 2023–2024, driven chiefly by acute labor shortages. Ueda stressed that labor scarcity is pushing companies toward domestic capital deepening and labor-saving automation, as well as investment in decarbonization and digital transformation.

That resurgence, he said, could help Japan achieve a four-decade-old vision of an economic adjustment led by domestic demand by narrowing the corporate saving surplus.

Ueda cautioned, however, that net primary income from foreign investments, which exceeds 6% of gross domestic product, will remain a lasting pillar of Japan’s external accounts.

He added that although demographic aging may reduce household savings, higher domestic productivity and capital spending could gradually shrink the national saving-investment gap.

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