Business / Economy

Japan's economy 'almost stopped deteriorating,' government report says

Kyodo

Japan’s economy nearly ceased worsening as it began to reopen following the complete lifting of a nationwide state of emergency over the coronavirus pandemic, the government said in its monthly economic report for June released Friday.

The government, which said the economy was “worsening rapidly” in its May report, revised its monthly assessment upward for the first time since January 2018.

“The Japanese economy is still in an extremely severe situation due to the novel coronavirus, but it almost stopped deteriorating,” the Cabinet Office said, citing improving private consumption in line with the reopening of economic activities across the country.

The upward revision in consumer spending assessment was also the first since January 2018.

In May, the government said that private consumption was “decreasing rapidly,” with many people refraining from going out for nonessential reasons under the government’s stay-at-home request.

The government had described the country’s economy as recovering moderately since January 2018 but downgraded its view in March as the pandemic began taking its toll.

Out of 11 main components of the assessment, the government revised upward its view of private consumption and corporate judgments of business conditions.

Japan fully lifted on May 25 the nationwide state of emergency first declared in several densely populated prefectures in early April, calling for voluntary restrictions on social and economic activities.

Effective Friday, restrictions on travel across prefectures were also called off.

But with consumption recovering only slowly and businesses still facing a long road to full recovery, the government maintained its cautious view on corporate capital spending, exports, production and employment, among others.

“The current economic condition is far from what we can describe by using the word ‘recovery’ and its direction is still downward, but we are no longer seeing a situation where the economy is expected to continue worsening,” a government official told reporters.

The report said while some short-term improvement can be expected given the government’s stimulus measures and reopening of the economy, attention should be paid to “the trend of domestic and overseas infections” and global financial market fluctuations.

The assessment on firms’ view of business conditions was upgraded for the first time since April 2017. The report said it is showing “signs of improvement” even though “some severe aspects remain.”

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