Japan government: Economy recovering, global slowdown a worry
TOKYO, July 23 (Reuters) - Japan's economy is still recovering, led by robust consumer spending and reconstruction after last year's earthquake, but there are signs a slowdown in overseas economies is spreading and that poses risks, the government said today.
The government stuck to its assessment of the overall economy, private consumption and exports in its monthly economic report for July, but strengthened its warning about weaker US and Chinese economic data as Japan's exports start to slow.
“The economy is moderately recovering helped by reconstruction demand, although difficulties continue to prevail,” the Cabinet Office said in its latest report.
The report came after the Bank of Japan also kept its assessment of the economy but made technical changes to its money market operations and bond purchasing scheme to better funnel money into the economy.
The slowdown in the United States and China, in addition to Europe's sovereign debt crisis, could weigh on Japan's economy by causing disruptions in financial markets, the Cabinet Office said.
The government left unchanged its assessment that exports are showing signs of recovery, but a Cabinet Official told reporters there is reason to be worried as data for the first half of June showed that exports to the United States and Asia had weakened. The government kept its assessment that personal consumption is rising moderately as retail sales rise recover following the earthquake and as subsidies for energy-efficient cars boost auto sales.
Japan's economy is still expected to outperform most other developed nations this year thanks to solid domestic demand, but analysts have slashed forecasts for factory output as the slowdown in the global economy becomes more pronounced, according to a Reuters poll earlier this month.
Japan's economy, the world's third-largest, is set to grow 2.2 per cent in the year to next March, according to a Reuters poll of economists, slightly slower than the 2.3 per cent pace seen in a similar survey in June. — Reuters