TOKYO- China’s “zero-COVID” restrictions could weigh on world growth by prolonging supply chain disruptions and global inflationary pressures, a Bank of Japan policymaker said on Wednesday.
The remark follows a warning last month by International Monetary Fund head Kristalina Georgieva that China should reassess its zero-COVID approach to the pandemic given the emergence of the highly contagious Omicron variant.
“China’s economy is the world’s market and factory,” BOJ board member Toyoaki Nakamura said in a speech.
“There’s a risk its ‘zero-COVID’ policy amid widening Omicron infections could weigh on the global economy, as well as prolong global supply chain disruptions and inflationary pressures,” he said.
Uncertainty over how quickly Japanese companies pass on rising raw material costs to households is also among risks to the country’s economy, said Nakamura, a former executive at Japanese electronics giant Hitachi Ltd.
Nakamura said Japan’s economy is expected to recover as the impact of the pandemic and supply constraints subside.
But he said the BOJ will maintain its ultra-loose policy to ensure the economy strengthens enough to accelerate inflation to its 2 percent target.
Meanwhile, the total amount of money circulating in Japan hit a fresh record for the 11th straight month in January, data showed on Wednesday, as huge monetary stimulus and government spending to combat the COVID-19 pandemic work their way through the economy.
But the annual pace of increase slowed to the lowest since April 2020 due to the base effect of a sharp jump in deposits last year, when households and firms hoarded cash to cope with curbs on economic activity to combat the pandemic.
Japan’s M3 money supply, a broad measurement of the amount of money available in the economy, rose 3.3 percent in January from a year earlier, Bank of Japan data showed, slowing from a 3.4 percent gain in December.
The total balance extended a record high at 1,534.5 trillion yen ($13.29 trillion), which is roughly triple the size of Japan’s economy, the data showed.
The BOJ has pledged to maintain its massive monetary stimulus and keep printing money to stimulate the economy, even as other central banks eye an exit from ultra-loose policy. — Reuters
