Japanese gov't remains cautious view of economic recovery

Nov 26, 2021

Tokyo (Japan), November 26: The Japanese government on Thursday kept its view that the economic recovery from the COVID-19 fallout is showing "weakness", while expressing wariness over the impact of higher raw material costs including crude oil prices, local media reported Thursday.
"The Japanese economy continues to show weakness in picking up, although the severe situation due to the novel coronavirus is gradually easing," the Cabinet Office said in its overall assessment for November, maintaining the same view from the previous month.
By component, the assessment of private consumption was upgraded for the first time in 13 months, with the office saying that it shows "movements of picking up, while some weakness remains."
The office described it as showing "further weakness" in the previous month. The change came after the Japanese government lifted the COVID-19 state of emergency nationwide on Oct. 1 and relaxed the attendance restrictions on large-scale events, which supported consumer sentiment from the impact of anti-pandemic measures.
The view on exports and industrial production was downgraded by the office due to disruptions in supply chains that have forced Japanese automakers to trim output.
Exports in November were described as "almost flat", compared to "increasing at a slower pace" a month earlier, being revised downward for the second consecutive month.
Meanwhile, the assessment of industrial production was downgraded for the first time in two months, with the report saying the pickup "appears to be pausing," partly due to sluggish exports of production machinery to Asian countries.
Looking ahead, the government expected the economy to pick up as "economic and social activities move toward normalization," but full attention should be given to a further increase in downside risks amid "supply-side constraints and raw material prices."
A Cabinet Office official said that the impact of rising raw material costs, which might squeeze the profits for Japanese firms, "may become more noticeable in earnings reports for the October-December period for listed companies."
He added that the impact on consumers also must be carefully watched since consumers' purchasing power could be dragged down as electricity bills are expected to rise further, and many companies including daily goods makers have announced to raise prices of their products.
Source: Xinhua