Japanese economy is ‘picking up slowly’

20 May 13
Increasing private consumption and exports mean Japan’s economy is showing signs of recovery, the country’s Cabinet Office said today.

Its monthly economic report also states that industrial production is ‘picking up slowly’, while corporate profits ‘show movements of improvement’ and companies’ assessment of current business conditions ‘show signs of improvement’. There are also ‘signs of improvement’ in the employment situation, it added.

The assessment is the most positive to be made by the government so far this year. Last month it said that the economy – the world’s third largest – showed signs of picking up but ‘weaknesses’ could be seen in some areas.

‘The Japanese economy is picking up slowly,’ today’s outlook states. ‘The recovery is expected to resume gradually, supported by the improvement of confidence, the improvement of export conditions and the effect of the policy package and monetary policy.’

It did, however, note that ‘slowing down of overseas economies is still [a] downside risk. Also, attention should be paid to the employment and income situations over the future.’

In January, Japan’s government and central bank announced plans to work together to end deflation and promote growth.

In its statement today, the Cabinet Office reiterated the government’s commitment to ‘eliminate deflationary expectations and avoid further deterioration of [the] economy with prompt and flexible economic and fiscal policy management’.

It added: ‘In particular, the market has recently observed situations such as rising share prices, expecting the economic recovery. The government will ensure that these signs of improvement lead to realising economic recovery via appropriate policy management.’

The government expects the Bank of Japan to achieve its 2% inflation target at the ‘earliest possible time’, it added.

Last month, the Organisation for Economic Co-operation and Development hailed the action taken by Japan’s prime minister, Shinzo Abe, to restore the country to growth, but called for more to be done to reduce its public debt. Last year, debt levels reached 220% of gross domestic product.

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