Govt keeps economic assessment unchanged

Jiji Press

11:02 JST, May 26, 2022

TOKYO (Jiji Press) — The government kept its basic economic assessment unchanged in a monthly report released Wednesday while sounding an alarm over the impact of a resurgence of COVID-19 in China.

“The Japanese economy shows movements of picking up,” the Cabinet Office said in the May report.

The government did not refer to novel coronavirus impacts in its economic overview for the first time in two years and three months, because the number of new COVID-19 cases in Japan has been decreasing recently and moves to normalize economic activities are making progress.

In the April report, the government said, “The Japanese economy shows movements of picking up as the severe situation due to the novel coronavirus is easing.”

Meanwhile, the government lowered its basic view on the global economy for the first time since April 2020, citing a standstill in some areas despite the overall pickup.

The downward revision in the May report reflects a halt in economic activities in China traced to lockdown and other stringent measures the country implemented to stem the spread of the novel coronavirus under its “zero-COVID” policy.

In the latest report, the government revised down its view on Japan’s imports for the first time since November 2021, saying that they are in a weak tone recently.

“Imports are decreasing for a wide range of products due to China’s restrictions on economic activities,” a Cabinet Office official said.

But the official added that the weaker imports did not lead the government to lower its overall assessment on the Japanese economy as “domestic demand remains strong.”

The government kept unchanged its assessment on private spending, a pillar of domestic demand, saying that consumption is showing “movements of picking up.”

“Spending on services, such as eating out and travel, grew during the Golden Week holiday period from late April to early May and remained strong even after the period,” the official said.

At the same time, the official warned of negative effects on consumption of supply constraints stemming from China’s COVID-19 countermeasures and rising prices reflecting Russia’s aggression in Ukraine.

The government basically kept its assessment on consumer prices unchanged, but modified the wording from the previous month, saying that they are “rising recently.” The April report said consumer prices are “rising moderately recently.”

The official said that “prices will likely keep rising for the time being.”

The government revised up its assessment on the employment situation for the first time since December last year. The May report said that it is showing “movements of picking up.”

“The jobless rate has fallen close to pre-pandemic levels, and the number of new job offers is increasing, mainly in the lodging and restaurant sectors,” the official said.

Housing investment is largely leveling off, the government said, raising its view on the sector for the first time since September 2021, citing a recovery in construction starts for condominiums for sale.

The April report said that housing investment was in a weak note.

The views on exports, industrial production and public investment were left unchanged.

Looking ahead, the latest report said that the Japanese economy “is expected to show movements of picking up,” but warned that “full attention” should be given to downside risks in the face of the supply constraints and rising raw material prices amid the COVID-19 resurgence in China and the prolonged conflict between Russia and Ukraine.