Japan's government lowered its outlook for industrial production and corporate profits despite keeping its assessment of the domestic and overseas economies unchanged, the Cabinet Office said on Wednesday.

“The Japanese economy is picking up moderately, although some weakness is seen," the government said. The updated assessment said the world economy continues to recover moderately, “although some weaknesses have been seen in some regions" such as Thailand and Germany.

The government lowered its assessment on industrial production for the first time since December 2022 and corporate profits for the first time since April 2020. It said industrial production “has been in a weak tone recently.” The previous view was industrial production "appears to be pausing before picking up.” The BOJ this month lowered its assessment on industrial production, saying production had been more or less flat. The previous view was the production had been rising as a trend.

Corporate profits are improving broadly, although “the pace has become moderate.” The previous view was “although some weakness remains.”

Amid elevated inflation, the government repeated its assessment that “consumer prices are rising.”

The government maintained its optimistic short-term view, saying the economy was expected to show signs of picking up due to supportive policies. However, the government warned the “slowing down of overseas economies is a downside risk for the Japanese economy amid ongoing global monetary tightening and other factors.”

It also said full attention should be given to price increases, supply side constraints and fluctuations in the financial and capital markets. An official at the Cabinet Office said the government continues to closely monitor developments in volatile financial markets and the impacts on Japan's economy, although there had been no significant impact yet.