Japan’s Finance Ministry Cuts View on Regional Economies

Japan’s Finance Ministry lowered its evaluation of the country’s regional economies for the first time in nine months as the yen’s advance to a postwar high against the dollar weighed on growth.

The economies “are in a severe state, though they are improving at a moderate pace,” the ministry said in a quarterly report released today in Tokyo. It downgraded its assessment for five of 11 areas it tracks including Tokai, home of Toyota Motor Corp. (7203) It maintained its view in five and became more optimistic in its evaluation of Okinawa, the nation’s southernmost island.

The yen’s appreciation has been one factor in causing regional economies to slow to a “standstill,” Finance Minister Jun Azumi said at the meeting of the ministry’s regional bureau chiefs in Tokyo today. Japan’s currency rose to a postwar high of 75.35 in October, an appreciation that, coupled with weaker demand, caused Japan to post its first annual trade deficit in 31 years in 2011.

As for the outlook, the ministry said foreign exchange rates and overseas economies may threaten regional economies.

To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

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