For the first time since February 2006, the Cabinet Office, in its monthly economic report for May, upgraded its overall assessment of the economy. The Bank of Japan also raised its assessment of the economy for the first time in two years and 10 months. BOJ Gov. Masaaki Shirakawa said the economy has already passed the "free fall" period. The office's report says, "While the economy is in a difficult situation, the pace of deterioration has moderated."
These rather optimistic views come despite the government's earlier announcement that Japan's gross domestic product for the January-March period contracted from the previous quarter at an annualized 15.2 percent in real terms. The fact is that improvement has been seen in industrial output and exports, and in the consumer mind.
Economic stimulus measures are also exercising their effect on the economy; inventory adjustment is making progress; and positive signs are seen in the overseas economic climate, especially in China. Mr. Shirakawa said, "GDP is showing signs of improving significantly in the April-June quarter," compared with the previous quarter.