Japan Continues To See Moderate Economic Recovery
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The Japanese government stuck to its assessment that the economy is recovering moderately, although it reiterated the need to pay close attention to potential global economic risks and financial market volatility.

“The economy is expected to continue recovering at a moderate pace with the improving employment and income situation,” the Cabinet Office said in its monthly report for October, keeping the assessment unchanged for a third straight month.

The report was published following Sunday’s general election, where Japan’s ruling bloc, led by the Liberal Democratic Party, lost its majority, adding complexity to the outlook for interest rates and fiscal policy. The monthly report highlighted rising interest rates in the U.S. and Europe, along with stagnation in China’s real estate market, as potential risks to Japan’s economy. It also noted that the effects of conflicts in the Middle East and Japan’s inflation should be closely monitored.
 
 

The government maintained its outlook on most economic sub-sectors, with the exception of industrial production, which was downgraded from “shows movements of picking up” to “recently flat.” This marks the first downgrade in industrial production in eight months. The report noted that while recovery in the sector is expected, the impact of potential economic downturns abroad should be closely watched.

The government also reported that private consumption, which makes up over half of economic output, continues to show signs of recovery, with growing demand for new vehicles and household appliances. Business investment is also on the rise, and companies’ assessments of current business conditions are improving. The report was presented on Tuesday at a meeting attended by relevant cabinet ministers and Bank of Japan (BOJ) Governor Kazuo Ueda.

The BOJ‘s closely monitored “tankan” survey revealed earlier this month that Japanese business sentiment held steady in the three months to September. However, companies remain cautious, with service-sector firms anticipating a decline in business conditions over the coming three months. 

Source: Reuters

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