Japan's government on Thursday upgraded both its overall economic assessment and its view of private consumption, both seeing the first month-on-month rise since December 2021, the Cabinet Office said Thursday.
The Japanese economy “shows movements of” picking up as the severe Covid situation “is easing,” the Cabinet office said, noting that private consumption also “shows movements of” picking up recently.
Current policies and the strength of overseas markets were helping the recovery, the report said.
“Private consumption, mainly eating and drinking services, is recovering after the government lifted the quasi-emergency measures, and the recovering private consumption was the main reason of upgrading the overall economic assessment,” an official at the Cabinet Office said.
CONSUMER SENTIMENT DIPS
However, the official added that consumer sentiment worsened on the back of the rise in prices triggered by the weak yen and a worsening of the terms of trade.
“The weak yen has both positive and negative impact. The weak yen is increasing import prices and squeezing corporate profits. But they haven’t been affected the underlying trend of economy,” the official said.
Other assessments were left unchanged, noting that “consumer prices are rising moderately recently.”
However, the government warned that attention should be given to growing downside risks due to rising raw material prices, fluctuations in the financial and capital markets and supply-side constrains, along with the the uncertainties of the Ukraine war.
The report also noted that despite the recovery, coronavirus was still a potential threat.