The government Friday maintained its assessment that the domestic economy is recovering moderately, while downgrading its view of corporate profits due to falling commodity prices and a firmer yen.

The Cabinet Office said in its report for the fourth straight month that the economy is experiencing "a moderate recovery, while weakness can be seen recently," with consumer spending lacking strength but income and employment conditions improving.

On short-term prospects, the government said the economy is expected to recover but warned of the effects of fluctuations in financial markets ahead of a referendum in Britain on whether to leave the European Union.