Regional economies have "shown partial signs of having bottomed out" on the back of the yen's recent depreciation and rising stock prices, the Finance Ministry said Wednesday.
Although eight of 11 regions, excluding Hokkaido, Okinawa and quake-hit Tohoku, downgraded their assessments of the economy for the three months through December, business sentiment has sharply improved in some areas from January, a ministry official said.
While the consumer boycott of Japanese products in China over a territorial dispute and Europe's sovereign debt crisis had dampened exports during the last three months of 2012, output hit bottom in the beginning of January in the Tokai and Kanto regions, the official said.
The official added that Japan's economy may continue to pick up, given the latest large-scale stimulus package is likely to help boost growth, with the global economy also starting to recover.
Earlier in January, Prime Minister Shinzo Abe's Cabinet endorsed a stimulus package entailing ¥10.3 trillion in central government funds in an attempt to add around 2 percentage points to the nation's real gross domestic product growth and create at least 600,000 jobs.
The previous quarterly report, released by the Finance Ministry in October, said economic activity "showed some pausing" in the three months to September on weak exports and output amid shrinking demand overseas.