The government on Tuesday downgraded its overall assessment of the economy for the first time in a year, acknowledging that the pace of improvement has slowed and downside risks have increased.

“Movements toward an incipient recovery continue to be seen in the economy, though the pace has become more gradual,” the Cabinet Office said in its monthly report on the economy for November.

In the October report, the office maintained its overall assessment for the third straight month, saying, “Movements of a moderate incipient recovery continue to be observable in some areas of the economy, though the environment has become more severe.”

Heizo Takenaka, state minister for fiscal and economic policy, later told a news conference that the economy has continued to improve but that the strength of exports and industrial production in leading it has weakened.

The government has also become more cautious about downside risks to the economy due to plunges in share prices and the deceleration in U.S. economic growth.

“The environment, such as concerns over the future of the U.S. and other economies and sluggishness in domestic stock prices, has become more severe, and concerns over downward pressure on final demand that may be exerted by the development have deepened,” the office said in the report.

Said a senior Cabinet Office official, “The upward trend of the economy remains intact, but the upward angle has become smaller.”

The official added the downward revision largely stems from a slowdown in exports and industrial production.

The government downgraded its judgment on exports for the third straight month and production activities for the first time in two months.

“Exports are declining somewhat, and the pace of incipient recovery in industrial production has become more gradual,” the report says.

The official said the slowdown in exports of information technology-related products has become noticeable as their worldwide demand has fallen.

The office also revised downward its assessment of employment.

“While movements toward improvement can be seen in some areas, the employment situation continues to be severe, with the unemployment rate at a high level,” it said.

The office maintained its assessment on private consumption, saying that while it is flat, firmness can be seen in some areas.

For corporate capital investment, it revised its judgment upward, saying investment is bottoming out.

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