The Japanese government kept its basic economic assessment unchanged in a monthly report released on Wednesday, while cutting its rating on capital spending by companies for the first time in 16 months.
In the November report, the government raised the view on imports for the first time in 12 months while maintaining its views on other items.
“The Japanese economy is on a moderate recovery, while weakness can be seen in some areas,” the Cabinet Office said in the report. The economy is “expected toward recovery” in the short term, it said.
The latest report came despite recent government data showing that the Japanese economy shrank 0.8 percent on an annual basis in July-September, the second straight quarterly contraction.
In the gross domestic product data released last week, corporate capital expenditures declined 1.3 percent in the fiscal second quarter from the previous three months after falling 1.2 percent in the first quarter.
In the November report, the Cabinet Office said corporate capital spending is “almost flat,” a weaker view than the October assessment that it is “picking up generally.”
Tepid capital spending appears to reflect “not so strong expectations for growth” in the medium to long term, while business confidence is weighed down by a slowdown in the Chinese economy in the short term, a Cabinet Office official said in a press briefing.
Still, the government did not change the overall economic assessment because “the environment surrounding companies is improving” partly thanks to a weak yen, the official said.
“Corporate earnings are at record-high levels,” Prime Minister Shinzo Abe said at a meeting of his cabinet ministers on ways to revive the Japanese economy last month. “I hope companies will now actively and boldly invest in equipment, technologies and human resources.”
The upgrade on imports in the November economic report came after imports rose 1.7 percent in July-September after dropping 2.8 percent in April-June. Still, the Cabinet Office official noted that domestic demand is “not very strong.”
Following the GDP report, Abe announced plans to compile a supplementary government budget that will finance the first set of measures aimed at achieving his new economic policy target of boosting the country’s annual GDP to ¥600 trillion by around 2020. The government is expected to unveil the first measures later this week.Speech(Jiji Press)
Link: http://the-japan-news.com/news/article/0002586753
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