In its latest monthly economic assessment on Monday the government maintained its view that Japan’s economy has seen increased weakness in some sectors, as measures to curb the spread of COVID-19 continued to weigh on consumption in July.
The economy is showing “further” weakness in some components and remains in a severe situation due to the pandemic, the Cabinet Office said, employing the same wording for the third straight month after downgrading the evaluation in May.
The government’s latest view on the overall economic situation came after Tokyo entered a fourth state of emergency over the pandemic July 12, due to a surge in COVID-19 cases following the end of the third emergency late last month.
The office retained its view on private consumption, saying it “has shown further weakness recently, especially in services spending.”
A government official told reporters the office gave up on upgrading the evaluation for consumer spending after seeing it worsen this month.
“In particular, spending on entertainment-related activities picked up in late June. But this month, consumption became sluggish again as a whole, so we ended up maintaining the assessment,” the official said.
With a ban on restaurants and bars serving alcohol, the latest virus emergency will last until Aug. 22 for the capital and Okinawa Prefecture, covering the entire period of the Tokyo Olympics from Friday through Aug. 8.
The prefectures of Chiba, Saitama and Kanagawa, which surround Tokyo, as well as Osaka Prefecture are under a quasi-emergency through Aug. 22 that allows serving alcohol until 7 p.m. as long as certain COVID-19 precautions are in place.
By component, the office upgraded its view on corporate business sentiment, saying that it shows “movements of picking up, although some severe aspects remain.” The official cited the Bank of Japan’s tankan quarterly survey released earlier this month, which indicated improved confidence among major companies.
Assessments of other major components were unchanged. The report said that exports “continue to increase moderately” and that business investment and industrial production are both “picking up.”
Looking ahead, the office used the same wording as the June report, saying the economy was expected to continue picking up as the government accelerates its vaccine rollout, but warned that “full attention should be given” to the impact of the pandemic on domestic and overseas economies.
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