The government on Wednesday downgraded its basic assessment of the economy for the first time in six months, saying the March 11 earthquake and tsunami have put serious downward pressure on exports, production and consumption.
The monthly report by the Cabinet Office said, "Although the Japanese economy was picking up, it shows weakness recently, due to the influence of the Great East Japan Earthquake." It said in March that the economy was "turning to pick up" although it was "only weakly self-sustaining" amid the influence of the disaster.
Economic and fiscal policy minister Kaoru Yosano said the negative impact of the disaster could be short-lived, however.
"Many economists believe the economy will rise again before the year's end," Yosano told reporters. "I hope it would be the case."
He also noted that the biggest threat to the economy so far is power supply shortages, expressing his concern about the crisis at the Fukushima No. 1 nuclear power plant, which earlier led Tokyo Electric Power Co. to implement rolling blackouts.
The government lowered its assessment of exports, industrial output and private consumption while maintaining the evaluations on other components, including employment conditions and business investments.
Exports had shown signs of picking up, but now the office is concerned that a decline will be caused by the earthquake disaster, the report said.