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Just two weeks after Japan slashed its third-quarter gross domestic product estimates, the Bank of Japan issued a dose of optimism about the future prospects for the world’s third-largest economy. It said the country’s export-driven economy is recovering and likely to return to a “moderate expansion” phase.

Japan’s economy has continued its “moderate recovery trend” with a pick up of exports, the BOJ said Tuesday as it announced it plans to keep monetary policy unchanged. Tokyo‘s Nikkei 225 was trading up 0.5 percent in late-day trade on Tuesday.

“On the domestic demand side, business fixed investment has been on a moderate increasing trend as corporate profits have been at high levels and business sentiment has improved somewhat,” the Central Bank said. “Against the background of steady improvement in the employment and income situation, private consumption has been resilient and housing investment has continued its pick-up.”

The BOJ said Japan’s economy is likely to turn to a “moderate expansion,” although it also cited certain macroeconomic and geopolitical risks, such as developments in emerging and commodity-exporting economies like China; developments in the U.S. economy and the impact of its monetary policy, and consequences stemming from the U.K.’s vote to leave the European Union.

“Domestic demand is likely to follow an uptrend, with a virtuous cycle from income to spending being maintained in both the corporate and household sectors, on the back of highly accommodative financial conditions and fiscal spending through the government’s large-scale stimulus measures,” the bank said. “Exports are expected to follow a moderate increasing trend on the back of an improvement in overseas economies.”

Most recently, retailers in Japan saw mixed sales in November, as cold weather buoyed sales of winter items, while construction projects and one fewer Sunday compared with the same month last year bit into some companies’ revenue.

Fast Retailing said November same-store sales at its Uniqlo outlets in Japan grew 7.3 percent on the year. Isetan Mitsukoshi said sales among its nine department stores in the Tokyo metropolitan area slipped 2.7 percent year on year for the month.

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