U.S. Treasury Secretary Jack Lew has expressed concern about the future of the Japanese economy, saying the outlook for internal demand as a driving force is "clouded."
Lew's comment on Japan was contained in a letter addressed to "colleagues" gathering for the Group of 20 meeting of finance ministers and central bank chiefs in Sydney later this month.
"Japan's economy has been largely driven by domestic demand over the last two years, but the outlook for domestic demand has clouded," the secretary wrote.
Lew expressed hope that Prime Minister Shinzo Abe's administration will properly implement measures aimed at boosting growth that feature structural reforms, deregulation and tax breaks as the "third arrow" of Abe's recovery program dubbed "Abenomics."
"It is important that the Japanese authorities remain committed to calibrating all three arrows of Abenomics so that the recovery from nearly two decades of subpar inflation remains domestic demand-led," Lew wrote.
"I look forward to hearing about Japan's progress in implementing structural reforms that will further drive domestic demand."
Abe has said he will steer the economy out of deflation by carrying out a program that has three arrows — a massive accommodative easing policy, a fiscal stimulus and the growth strategy.
Lew indicated he hopes the Abe team successfully carries out steps "to cushion the impact" of the increase in the consumption tax to 8 percent in April.
The G-20 groups Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the European Union.