The government on Wednesday downgraded its key assessment of the Japanese economy for the first time in three months as consumption fell further amid the extended state of emergency following the coronavirus pandemic.
The Japanese economy is showing “new” weakness in some components and remains in dire straits due to the coronavirus pandemic, the Cabinet Office said in its May monthly report outlining the overall picture of the Japanese economy, but has added that there were persistent signs that it is gaining momentum.
In the previous month, the report said the economy was showing weakness in some components but did not use the word “further”.
By component, the office downgraded its view on consumer spending, the first downgrade in three months.
As people demanded to stay home and restaurants and bars close early amid the country’s third state of emergency against the virus since the end of April, he said consumption “shows further weakness. more recent, in particular in expenditure on services ”.
In April, the report said private consumption had shown “a weak tone recently.”
Amid a fourth wave of infections triggered by highly contagious viral variants, the third emergency initially declared for Tokyo, Osaka and two other prefectures was scheduled to end on May 11.
But the government extended it until next Monday and extended the areas subject to restrictive measures to 10 prefectures. With the spread of the virus showing no signs of slowing down, he plans to make a final decision later this week on whether to extend the emergency until June, a senior government official said.
“Consumption started to decline in mid-April and plunged to a fairly low level during the Golden Week holidays” from late April to early May, typically one of the busiest times of the year for the year. tourism sector, a government official told reporters.
“Spending on goods has been relatively strong, but spending on services remains slow,” the official added.
The monthly report also downgraded its take on valuations of business activities for the first time in four months, saying they “appear to be taking a break” in the recovery as “some serious aspects remain” .
Regarding exports, the office kept its assessment but adopted a different wording. He said exports “continue to increase moderately”, compared to the phrase “increasing at a slower pace” in the April report.
Valuations of the other major components remained unchanged, with the latest report indicating that business investment and industrial production are “picking up”.
Looking to the future, the government said the economy is expected to continue to recover, but warned that “full attention should be given” to a further increase in downside risks due to the spread of viral infections in the world. Japan and abroad.
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