Kuroda Rings Alarm on Economy by What He Says, Doesn’t Say

(Bloomberg) -- Bank of Japan Governor Haruhiko Kuroda sounded the alarm for Japan’s economy in a speech that described the toll from the coronavirus in language unusually strong for him.

“The spreading novel coronavirus is having a serious impact on our economy,” he told BOJ branch managers Thursday in Tokyo, citing across-the-board weakness in exports, tourism, consumer spending and factory production. “The economic outlook is extremely uncertain.”

Kuroda’s speech was also remarkable what for it didn’t mention: prices. History suggests the omission could be meaningful.

When Kuroda speaks to his branch managers in public, he usually makes comments about the inflation outlook that stick very close to already-released policy statements. The one time, in January 2015, when he said nothing, the bank later that month slashed its forecast.

The next projections for prices and the economy are due at the BOJ’s April 27-28 meeting. Major downgrades are likely, especially after Prime Minister Shinzo Abe this week declared a state of emergency in parts of the country that account for half of Japan’s economic output.

Japan’s GDP to Suffer Double-Digit Drop Before Rebound: Survey

It’s also possible the BOJ will skip giving projections altogether, just as the U.S. Federal Reserve did in March. The situation now is too unpredictable to allow for meaningful forecasts, former BOJ Chief Economist Hideo Hayakawa said in an interview last week.

Private sector analysts now see Japan’s economy shrinking by double-digits this quarter. The fallout will undoubtedly hurt price momentum, which Kuroda has been trying for years to stoke after more than a decade of Japanese deflation.

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