Japan Govt Lowers Basic Economic View for 1st Time in 10 Months

Jiji Press

10:11 JST, November 22, 2023

Tokyo (Jiji Press)—The Japanese government, in a monthly report on Wednesday, lowered its basic economic assessment for the first time in 10 months, citing weaker business investment as the main reason.

“The Japanese economy is recovering at a moderate pace, although it recently appears to be pausing in part,” the Cabinet Office said in its November report. The October report made no mention of a pause in the recovery.

By category, the government revised down its view on business investment for the first time in 23 months, saying that the pickup in investment “appears to be pausing.”

“The recent strength in the corporate sector has not necessarily translated into investment,” a Cabinet Office official said in a briefing. “Investment sentiment is strong, but actual investment is being delayed,” due to rising costs, the official added.

The official pointed to data showing that business investment in July-September fell in real terms for the second consecutive quarter, and noted that investment in machinery such as industrial robots and semiconductor production equipment was weaker.

Also weighing on the basic economic assessment was a decline in private consumption of goods, especially durable goods, the official said. The weaker consumption was attributed to inflation and sluggish new vehicle sales due to the effects of suspensions at some auto production plants.

But the assessment on private consumption as a whole, which is a pillar of domestic demand, was kept unchanged at “picking up” as services consumption, which makes up a majority of private consumption, continued to grow.

On prices, service providers are lagging behind in reflecting higher costs in prices, according to the government. Doing so appropriately is “key to achieving a positive cycle of wages and prices,” the Cabinet Office official noted.

In the November report, the views for all other categories, including industrial production, were kept intact.

Looking ahead, the government maintained its outlook that the country’s economy is “expected to continue recovering at a moderate pace.”

Regarding its policy stance, the government said it will swiftly implement its new economic package, which was adopted by the cabinet on Nov. 2.