Japan Govt Ups Economic View ahead of Tax Decision

Tokyo, Sept. 13 (Jiji Press)--The Japanese government upgraded its baseline economic assessment in a monthly report released on Friday, ahead of a final decision Prime Minister Shinzo Abe is expected to make early next month on whether to raise the consumption tax in April as planned. "The Japanese economy is on the way to recovery at a moderate pace," the September report said, compared with the August view that the economy "is picking up steadily and shows some movements on the way to recovery." The upgrade is the first in two months. Backed by a series of upbeat economic data, Abe now seems more likely to give the final go-ahead for the plan to raise the 5 pct consumption tax to 8 pct next April, according to sources familiar with his thinking. By category, the government raised its view on business investment, saying it "shows movements of picking up, mainly among nonmanufacturing industries." The assessment came after a Finance Ministry survey showed early this month that capital expenditure by Japanese nonfinancial firms in April-June grew year on year for the first time in three quarters, led by a 5.6 pct rise in the nonmanufacturing sector. The survey led to an upward revision to the government's growth data early this week. The revised data showed the country's real gross domestic product grew at an annualized 3.8 pct rate in the quarter, compared with the preliminary reading of 2.6 pct growth. In the September report, however, the government cut its views on personal consumption and exports. Personal spending was dampened partly by a pullback in stock prices, while the lower view on exports was mainly attributed to a halt in the recovery of exports to China, a Cabinet Office official said in a press briefing. Despite the downgrades of the two categories, the government raised its overall economic view as it recognized stronger business investment as a "very important" sign of a virtuous economic circle, the official said. The government kept unchanged its basic assessment on the global economy. By region, the view on China was raised for the first time in eight months, while the view on Europe was upgraded for the second straight month. The Indian economy was described as having weakened for the first time in six months. END