By Leika Kihara

TOKYO (Reuters) -Bank of Japan Governor Haruhiko Kuroda on Thursday stressed the bank’s readiness to maintain massive stimulus, as the fallout from the pandemic weighs on consumption and keeps inflation distant from its 2% target.

Kuroda stated that the third largest economy in the world will show more signs of recovery, as strong corporate profits and capital spending offset some of the decline in consumption.

However, he cautioned that the prospects for sustained economic recovery were uncertain as the outcome of the pandemic is dependent upon developments in the area.

Kuroda stated in an address to the online annual meeting Japan’s securities sector that “Consumption will increase if further advances in vaccinations enable society to curb infections and resume economic activity.”

The timing and pace for recovery of consumption is still uncertain, and may change depending on the unfolding pandemic.

Kuroda maintained optimism regarding exports, and said that output continues to increase despite constraints in supply.

Kuroda stated that service sector firms are still struggling to find funding and the BOJ will be focusing on reducing the impact of the pandemic through the loan programs put in place last summer.

Kuroda stated that the BOJ would examine the effects of the pandemic to the economy, and if required will take further easing actions.

Japan has recovered from its severe recession last year thanks to strong exports and solid demand.

However, chip shortages and disruptions in supply caused by Asian factory closures have impacted production in Japan which could threaten to halt the fragile country’s recovery.