Page last updated at 08:21 GMT, Friday, 18 September 2009 09:21 UK

Japan upbeat on economic recovery

Japanese shoppers
Japan is becoming increasingly optimistic about the economic outlook

The Bank of Japan (BOJ) has given an upbeat assessment of the Japanese economy and hinted it may soon withdraw some emergency support measures.

Along with other central banks around the world, the BOJ has been pumping money into the economy to help stimulate demand.

The bank said that keeping these measures in place too long could hinder an "autonomous recovery."

On Thursday, the bank said the economy was showing signs of improvement.

The Japanese economy emerged from recession in the second quarter of this year after four consecutive quarters of deep contraction.

Despite the comments, leading Japanese stocks slipped slightly after consumer lender Aiful said it would ask creditors to let it delay repayments of around 280bn yen ($3.1bn; £1.9bn).

The main Nikkei 225 index closed down 0.7%.

'Autonomous recovery'

Deputy governor of the BOJ Hirohide Yamaguchi said the economy was now entering a positive cycle.

The improved outlook meant that the bank could now consider winding up some of the measures it has been using to pump cash into the economy, by buying up company debt, for example.

"What we do with these special measures should be decided in line with the degree of improvements in corporate finance and market conditions," said Mr Yamaguchi.

"We need to pay heed to the risk that keeping these steps in place for long could hamper an autonomous recovery in market functions and distort distribution."

He also said that the pick up on the global economy is "expected to continue for some time."

On Thursday, the BOJ decided to keep interest rates at 0.1%. It also said that a stronger yen could support the Japanese economy in the long run, despite it making exports more expensive.

The yen is up 6.7% against the dollar since June but, earlier this week, Japan's incoming finance minister said he opposed intervention in the currency market.

The Democratic Party of Japan was voted in at the end of August, ending 54 years of near unbroken rule by the Liberal Democratic Party.

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