REPEAT: MNI POLICY: Japan Govt: Capex Firmer, Watch Trade

     TOKYO (MNI) - Japan's government on Friday upgraded its assessment of

capital investment for the first time in nine months but left its overall view

for September unchanged, saying for the ninth straight month that the economy is

"recovering moderately."

     As for the near-term outlook in its monthly economic report, the government

maintained its view, saying, "The economy is expected to continue recovering,

supported by the effects of the policies, while employment and income conditions

are improving."

     However, the government warned about the uncertainty in overseas economies

and the effects of fluctuations in the financial and capital markets.

     --DISASTERS' IMPACT EYED

     "Furthermore, sufficient attention should be given to the economic impacts

by the successive natural disaster," it said in the aftermath of a powerful

typhoon that hit Japan's western region and a strong earthquake that ripped

through Hokkaido in the north, both earlier this month.

     "The assessment of capital investment was upgraded based on strong capital

investment data in the Ministry of Finance's corporate survey and the upward

revision to capex in the (April-June) GDP," Hideyuki Ibaragi, director of

macro-economic analysis at the Cabinet Office, told reporters.

     Asked about the drag from the recent disasters on Japan's economy, Ibaragi

simply said, "We are analyzing the situation."

     "We expect the economy to continue recovering but must carefully watch the

impact of various risks to the economy," Ibaragi said.

     --TRADE SURPLUS SHRINKING

     The government changed the wording on balance of trade and services,

saying, "The surplus is falling." Previously, it said, "The surplus is largely

flat."

     In August, the government downgraded its view on exports for the first time

in three years, saying the pickup in exports is "marking time," instead of its

previous assessment that exports were "picking up."

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

[TOPICS: MTABLE]