MNI: Japan Govt Keeps Economic View, Cuts Industrial Output

MNI (TOKYO) - Japan’s government left its overall economic assessment in October for the third straight month, but lowered its view on industrial production for the first downward revision since February, the Cabinet Office said on Tuesday.

The assessments on other major components, such as exports, private consumption and inflation, were left unchanged from the previous month.

The government said that the Japanese economy is recovering at a moderate pace, although it recently appears to be pausing in part.

Industrial production “is flat recently,” the government stated, a change from its previous view, which held output showed evidence of "picking up.”

An official at the Cabinet Office told reporters that the downward revision was due mainly to the drop of exports of semiconductor manufacturing equipment, which had played a significant role boosting production.

The government repeated that private consumption shows movement of picking up recently, although it appears to be pausing in part.

NEAR-TERM OUTLOOK

The government maintained its optimistic view for the near-term outlook, noting the economy is expected to continue recovering at a moderate pace as employment and income improves supported by policy effects.

However, the government maintained its cautious view, saying slowing overseas economies presented a downside risk to the Japanese economy, including the effects of continued high interest-rate levels in the U.S. and Europe and “the lingering stagnation of the real-estate market in China.”

“Full attention should be given to price increases, the situation in the Middle East and fluctuations in the financial and capital markets,” the government added. It left its assessment on overseas economies for the fourth straight month, noting overseas economies are recovering, despite stagnation observed in some regions. 

The U.S. economy is expanding but attention should also be paid to downside risk to the economy on the back of continued high interest rates, and despite the U.S. Federal Reserve lowering its policy interest rate.

“To ensure the overcoming deflation, the Government will make efforts to implement a growth-oriented economy driven by wage increases and investment, standing on the principle of economy is the foundation of public finance,” the Cabinet Office added.