The Japanese government on Monday upgraded its assessment of the economy for the first time in eight months on the back of improvement in corporate profits and a pick up in industrial production.
In the monthly report released by the Cabinet Office, the government said the Japanese economy is on a moderate recovery, citing the improvement in the corporate sector.
In February, the government said the economy was recovering moderately, but pointed out weakness in private consumption.
The latest report noted steady improvement in private consumption and omitted the mention of weakness in consumer confidence, as the economy rebounds from a sales tax-driven recession.
“Private consumption holds firm as a whole,” the report said. “Business investment is almost flat”, it said, retaining the view from the previous month.
The assessment on exports was also unchanged and they were seen recovering. The pick up in industrial production was confirmed this month, whereas the February report said ‘showing movements of picking up’.
An improvement was noted in corporate profits this month, while they were seen ‘almost flat’ in February. The March report also mentioned signs of improvement in some business sectors.
The view on employment was retained as showing a trend towards improvement and the assessment on consumer prices remained as ‘flat’.
“Concerning short-term prospects, the economy is expected to recover, supported by the effects of downfall in oil prices and the effects of the policies, while employment and income situation show a trend toward improvement,” the report said.
“However, attention should be given to the downside risks of the Japanese economy including slowing down of overseas economies.”
The Bank of Japan last week maintained its overall economic assessment by repeating that the Japanese economy has continued its moderate recovery trend. The central bank retained its massive stimulus and cautioned that inflation may slow to about zero percent.
Last week, the Organisation for Economic Co-operation and Development raised this year’s growth forecast for Japan to 1 percent from 0.8 percent. In 2016, the economy is projected to expand 1.4 percent, which was faster than the 1 percent projected in November.
The material has been provided by InstaForex Company – www.instaforex.com