The government maintained Friday its view that the Japanese economy is “picking up” in its assessment for January, despite growing fears that the latest state of emergency imposed this month over the novel coronavirus could deal it a fresh blow.
In its monthly report, the Cabinet Office revised its views downward on private consumption and corporate business sentiment amid a third wave of virus infections since November, while upgrading its assessments of business investment and housing construction as the initial shock of the pandemic on the world’s third-largest economy has eased.
“The Japanese economy is still in a severe situation due to the novel coronavirus, but it is showing movements of picking up,” the office said, using the same wording for the seventh month in a row.
A resurgence of virus infections has led to increased uncertainty over the economy.
The government declared its second state of emergency over the pandemic for Tokyo, Osaka and nine other prefectures earlier this month through Feb. 7, prompting local authorities to urge people to stay home and restaurants and bars to close early.
The first emergency declaration, which eventually covered the entire nation and was effective between April and May last year, caused Japan to suffer its worst recession on record.
In the reporting month, the government cut its evaluation of consumer spending for the second straight month, saying that the pickup “appears to be pausing.” The December report said private consumption was “picking up as a whole, while weakness can be seen in some sectors.”
“Consumption of goods such as food to eat at home like luxury osechi New Year dishes and (Christmas) cake as well as winter clothing was solid, but spending on dining out and other services was weak,” a government official told reporters.
But the official also said, “Consumption might be at a standstill now due to the ongoing virus emergency, but it will be temporary and won’t affect the overall economic trend.”
The report also downgraded its evaluation of firms’ views on current business conditions for the first time in nine months, saying there “has been cautiousness recently, mainly among nonmanufacturers.”
As for capital expenditure and housing construction, the government upgraded its assessment for the first time in 28 months and 30 months, respectively.
The report said business investment “is starting to level off,” with the official referring to robust machinery orders, which are seen as a leading indicator of capital investment.
It left its assessments of other major components unchanged, including exports, imports and industrial production.
Looking ahead, the government said that full attention should be given to “the further increase in downside risks” due to the virus spread in Japan and abroad.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.