Japanese Government Cuts Economic View For Third Month

Japanese Government Cuts Economic View For Third Month

The Japanese government on Friday lowered its assessment for the economy for a third straight month, while Economy Minister Seiji Maehara said that he will convey the government's concerns over the impact of a strong yen to Federal Reserve Chairman Ben Bernanke and European Central Bank President Mario Draghi in a meeting on Friday.

"The economic recovery is in a weak tone recently due to deceleration of the world economy, although some components still show steady movements," the Cabinet Office said in a monthly report. The government noted that the exports are in a weak tone and industrial production is decreasing.

Japan's biggest worry is the upward trend of yen and its serious impact on exporters, Maehara said at a press conference in Tokyo. The minister said he would discuss the yen appreciation when he meets Bernanke and Draghi on Friday on the sidelines of the IMF-World Bank Annual Meetings in Tokyo.

The government report said corporate profits, which have been picking up so far, are show signs of leveling off recently. Business investment as a whole is picking up slowly, while some weak movements are also seen.

Firms, mainly manufactures, have turned more "cautious" in their judgment on current business conditions. The employment situation is exhibiting signs of improvement, though "some severe aspects still remained," according to the statement.

The government report drew attention to some recent weak movements in private consumption, though it remained almost flat at the moment. The economy continued to be in a mild deflationary phase, as indicated by the price developments, it said.

The recovery is expected to resume with the improvement of the overseas economy amid persistent reconstruction-related demand. However, uncertainty about the economic prospects of the Eurozone and Asia, notably China remained high.

The government warned that further slowing down of overseas economies and sharp fluctuations in the financial and capital markets are downside risks of the Japanese economy.

After the G7 meeting held on the sidelines on the IMF-World Bank meetings, Japan Finance Minister Koriki Jojima said that he has conveyed Japan's strong concerns over yen and its impact on the economy.

He said Japan's fiscal consolidation efforts will be a significant step toward maintaining public confidence in the government's fiscal policy, thereby supporting the country's medium- and long-term economic growth.

The Bank of Japan in September announced a fresh round of stimulus to revive the economy by expanding the total size of the asset purchase program by JPY 10 trillion to JPY 80 trillion.

On Europe, Jojima said "we hope that European countries will overcome conflicts in opinions and strengthen their efforts to unite together and establish a monetary union in the true meaning." Japan is ready to make contributions as necessary while keeping watch on these European efforts, the minister added.