The government said Wednesday that Japan’s economy is “improving,” raising its assessment based on a key index that showed exports and production rebounded robustly in March from slumps caused by the coronavirus pandemic.
The Cabinet Office used the most optimistic expression in the five-level evaluation for the first time since August 2018 after the coincident index of business conditions rose 3.2 points from the previous month to 93.1 against the 2015 base of 100.
The result followed a 1.7 point decline in February when the office said the economy was in an “upturn phase.” The government has upgraded the assessment twice in the past three months.
The latest reading, however, is still lower than the 94.0 marked in February last year when infection reports started increasing in Japan.
“We have to closely monitor the situation over the virus,” a Cabinet Office official told reporters.
In the reporting month, production in the auto-related and chemical industries was brisk, and car exports grew remarkably, the official said. As the number of daily coronavirus cases remained relatively low in March, retailers and wholesalers also marked robust sales, contributing to an improvement in the index.
In late March, the government fully lifted Japan’s second state of emergency, which was declared in early January for the Tokyo metropolitan area and later expanded to other regions.
As consumer spending significantly weakened during the state of emergency, many analysts say Japan’s economy is likely to have shrunk in the January to March period. Gross domestic product data for the final quarter of fiscal 2020 is scheduled to be released next Tuesday.
Wednesday’s data also showed that the leading index of business conditions, forecasting the situation in the coming months, rose 4.3 points to 103.2 in March, up for the 10th straight month and the highest since March 2014.
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