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REPEAT:MNI POLICY: Japan Sees Slow Exports; Modest Econ Pickup

Repeats Story Initially Transmitted at 11:16 GMT Aug 29/07:16 EST Aug 29
By Max Sato
     TOKYO (MNI) - Japan's government on Wednesday warned that external demand
is slowing amid the U.S.-China trade dispute but left its overall view for
August unchanged, saying for the eighth straight month that the economy is
"recovering moderately."
     In its monthly economic report, 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."
     --EXPORT SLOWDOWN
     Shipments of electronics parts and devices to China have slowed but they
are expected to pick up in preparation for the launch of new smartphone models
in coming months, Hideyuki Ibaragi, director of macro-economic analysis at the
Cabinet Office, told reporters.
     "The slowdown in exports is not serious enough to change the bigger
picture," he said. "We cannot confirm the effects of the trade dispute but we
will keep a close watch on it."
     Japanese auto exports to the U.S. are slowing but it is mainly because of a
decline in sales volumes caused by smaller discounts offered by U.S. car
dealerships, which does not necessarily reflect the overall economic climate,
Ibaragi said.
     The government also revised down its assessment of imports for the first
time in 10 months, saying their pickup is marking time, instead of there were
signs of a pickup.
     "Imports are unlikely to drop sharply as Japan's investment and consumption
are solid," Ibaragi said.
     --SLOW INFLATION PICKUP
     In light of the slow pickup in inflation, the government changed its
assessment of consumer prices for the first time in five months, saying the pace
of increase is "slowing."
     "In the wake of price markups for daily necessities, households have
tightened the purse-strings, making retailers cautious about raising prices and
putting downward pressure on consumer prices," Ibaragi said.
     Consumer inflation in Japan stagnated in July as mobile carrier discounts
offset recent markups in beer prices at restaurants and bars as well as higher
snack prices.
     The national average core consumer price index (excluding fresh food) rose
0.8% on year in July for the 19th straight year-on-year rise, with the pace of
increase unchanged from June, when it rose from 0.7% in May.
     --HOT WEATHER NEUTRAL
     The government maintained its views on other key components of the economy:
private consumption is "picking up" while business investment and factory output
are "increasing moderately."
     The recent drastic weather patterns are having both positive and negative
effects on consumption.
     A series of heat waves boosted demand for beverages and air conditioners
but dampened retail sales in general as extreme weather patterns -- high
temperatures and rain storms -- kept shoppers away.
     Looking ahead, the government maintained its outlook that the economy will
continue "recovering," supported by an improvement in labor and income
conditions and the effects of fiscal spending.
     Among the risks to its outlook, it highlighted the impact of trade disputes
on global growth, and noted lingering uncertainty in overseas economies and the
effects of fluctuations in financial and capital markets.
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com

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