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The government has revised downward its assessment of the domestic economy in June for the first time in five months due to shrinking exports following a slowdown in overseas economies.

“While the economy remains roughly flat, weak movements have been seen recently in some areas,” the Cabinet Office said Tuesday in its report on the state of the economy for June.

The economic trend in general was unchanged in June from the previous month, said Jun Saito, director of economic assessment and policy analysis at the Cabinet Office. But some indicators showed weakness, especially those of exports and capital investment, he said.

The latest report says exports “have become flat.” The May report said they were “gradually increasing.”

The office said some Asian economies, including South Korea and Taiwan, saw a slowdown apparently due to the spread of severe acute respiratory syndrome.

The office downgraded its assessment of some European economies but left its assessment of the U.S. economy unchanged. The world’s largest economy continues to see a feeble recovery, it says.

According to the report, incipient recovery of capital investment “has become moderate” and industrial production “is declining somewhat.”

It also says improvement in corporate profits has become moderate but private consumption remains generally flat.

Looking ahead, the report says the economy “is expected to move toward an incipient recovery if the recovery in the U.S. and other economies is sustained.”

But there are concerns that uncertainties surrounding the future of economies overseas may exert downward pressure on final demand, it says.

Saito said the government must keep paying close attention to how the SARS epidemic, which has shown signs of abating, will affect the economies of Japan and other parts of the world.

The report says domestic wholesale prices are declining somewhat and consumer prices are flat. But deflationary pressure continues due to falls in crude oil prices.

The report says stock prices here are on a rising trend in step with U.S. share prices, with the Nikkei average briefly topping 9,000 last week for the first time in six months.

The May report cited flagging domestic share prices at around the Nikkei’s 8,000 mark as among the risk factors affecting the economy.

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