The government warned on Monday that the conflict in the Middle East could impact the economy through energy costs, while keeping its view that the economy was recovering moderately.
The concerns underscore policymakers' worries, with rising energy prices having already been a burden for the world's third-largest economy, which relies on imports to cover most of its energy needs.
The government added the developments in the Middle East to factors requiring close attention, as it "could pose a downside risk to the Japanese economy," said an official at the Cabinet Office, which compiled the monthly report for October.