Japan sees modest economic recovery and points to looming risks: Govt

TOKYO – The Japanese government described its economy as “moderately improving” in its monthly economic report, keeping the overall assessment unchanged from the previous month and noting an upward revision in factory production.

The government expressed cautious optimism on the world No. 3 economy, but highlighted the risks of a global slowdown amid trends overseas for monetary tightening and rising inflation, while households face slower wage growth.

“The economy is recovering moderately,” said the Cabinet Office, which prepared the report, “expected to continue as we stand ready to take all possible steps to prevent infections as socio-economic activity returns to normal.” , referring to coronavirus cases .

The report was approved by ministers in Prime Minister Fumio Kishida’s cabinet on Thursday.

The government upgraded its estimate of factory production for August as production recovered from falls in April and May as China’s anti-coronavirus lockdowns eased.

Factory production showed signs of recovery, the report said, compared to July, when production seemed to falter. It was the first upgrade in seven months.

Views of other major economic components remained unchanged from the previous month.

Private consumption, which accounts for more than half of Japan’s economy, recovered moderately, the report said, noting the resumption of activity among consumers “living with the coronavirus” following the lifting of COVID-19 restrictions.

“A downward divergence in the global economy stemming from global monetary tightening is looming as a risk weighing on the Japanese economy,” the report said.

“Full attention must be paid to supply shortages and the impact of price increases on households and businesses.”

Japan’s economy recovered from the COVID-19 slack at an annualized 2.2 percent from April to June.

Still, the pace of growth fell short of economists’ median estimates, raising doubts about the strength of private consumption and expectations of a pent-up demand known as revenge spending.

By Tetsushi Kajimoto

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