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The economy has worsened due to weak consumer spending and grim corporate sentiment, the Economic Planning Agency said April 10 as it acknowledged that the economy’s growth rate is shrinking.

In a carefully worded report for April, the agency downgraded its assessment of the economy from the preceding month and said the situation of the stagnant economy was more severe than before, due to sluggish consumer spending and bleak corporate sentiment.

Last month, the agency did not point out any changes in severity, leaving its assessment of the economy unchanged at “stagnant.” This time, however, the agency pointed to weakness in private consumption, which makes up 59 percent, or the largest portion, of Japan’s 480 trillion yen gross domestic product.

Regarding corporate capital spending — another major GDP factor — the agency took a gloomier view than it did in March, saying companies were gradually cutting down on capital outlays for plants and equipment.

The ratio of household monthly expenditures to disposable income dropped 3.5 percentage points over the past five months to some 68.4 percent in February, an EPA official said. Capital outlays account for 18 percent of the GDP.

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