Gov't maintains economic assessment, but warns of fragile recovery

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TOKYO, Oct. 16 Kyodo -
The government led by the Democratic Party of Japan issued its first monthly
economic report Friday, inheriting the previous government's view that the
economy is picking up but added a warning about the improvement's dependency on
overseas and public demand.
Despite some wording changes, the new government, inaugurated on Sept. 16,
maintained the assessment of the current state of the nation's economy for the
third consecutive month.
''Although the economy has been picking up, it is short of autonomous factors
and remains in a difficult situation, such as a high unemployment rate,'' the
latest monthly economic report by the Cabinet Office said.
Assessments of exports and imports were revised upward, but those of consumer
spending and corporate capital investment were left essentially unchanged.
''The direction the economy is heading in is upward but the move has been
chiefly driven by overseas demand and stimulus packages so far, and it has yet
to become a self-sustained recovery,'' Deputy Prime Minister Naoto Kan, who is
in charge of economic and fiscal policy, said at a press conference.
Kan said the government will implement economic policies focusing on putting
more money into the hands of consumers to strengthen domestic demand and to
achieve a sustained recovery.
In the report, the assessment of corporate sentiment was revised upward for the
first time in three months, saying it is ''picking up as a whole'' but the pace
of improvement for small and medium-sized companies is ''slow.''
The evaluation of exports was raised for the first time in three months thanks
to increasing shipments of electronics parts and chemical products to China.
For imports, it was the first upgrading in two months.
On short-term prospects, the report said the economy is expected to continue to
pick up but faces such risks as further deterioration in the employment
situation.
The report also warned of the possible negative effects of developments in
financial markets following the yen's recent appreciation against the U.S.
dollar.
The government maintained its economic assessment, in contrast with the Bank of
Japan's decision earlier this week to upgrade its economic evaluation. But Kan
said ''The basic view (of the two parties) is the same.''
He also said it would be appropriate to have more communication openly between
the government and the central bank so as to counter the public's possible
impression that political pressure is threatening the BOJ's independence.
At its two-day policy meeting that concluded Wednesday, the BOJ deferred a
decision on withdrawing emergency programs for corporate financing after
Cabinet ministers made a series of comments urging it to consider carefully the
state of the economy before unwinding the support schemes.
==Kyodo
2009-10-16 22:55:56