By Max Sato
(MaceNews) – Japan’s government on Wednesday warned that global and domestic economies could come under further attack from recent spikes in coronavirus infections, according to its monthly report released by the Cabinet Office.
The government also maintained its cautiously optimistic view that both the domestic and global economies are “showing signs of a pickup,” a statement unchanged since July when it revised up its overview.
On the near-term outlook, the government repeated, “The economy is expected to continue showing signs of picking up, supported by the effects of the policies and improvement in overseas economies.”
But it also warned about the negative impact of a third wave of the pandemic in many countries and cities, saying, “… full attention should be given to the further downside risks to the domestic and foreign economies.”
The government upgraded its view on the U.S economy for the first time since July, thanks to solid consumer spending and business investment, while downgrading its assessments on the eurozone, Germany and Britain for the first time since April in the wake of renewed restrictions on economic activity to fight a spike in coronavirus cases.
Official data released last week showed that Japan’s economy for the July-September quarter surged 5.0% on quarter, or an annualized 21.4%, led by a rebound in net exports and consumer spending, but it only recovered just over a half of a record plunge in April-June amid the pandemic-triggered slowdown.
Key points from the report:
The government revised up its view on industrial production for the first time in two months, saying it is “showing signs of improvement,” while lowering its view on business investment for the first time in two months, noting it has been “decreasing recently.”
In July-September, factory output rebounded 8.8% from the previous three months after plunging 16.9% in April-June but it was not strong enough to revive business investment for upgrading equipment and expanding automation, a key segment of the economy that has shown no signs of recovery amid the uncertain global outlook.
In the Q3 GDP data, business investment dipped 3.4% on quarter for the second straight drop after shrinking 4.5% Q2. It trimmed GDP by 0.6 percentage points.
Other details:
The government maintained its assessment of most of the other key components of the economy in the monthly economic report.
* Private consumption is picking up (upgraded in October).
* Exports are picking up (upgraded in September).
* Corporate profits are decreasing substantially (downgraded in April)
* Employment conditions are improving with some soft spots (upgraded in September).
* Consumer prices are flat (downgraded in March).
Contact this reporter: Max@macenews.com