Japan cuts its economic outlook in February for the first time in 10 months

TOKYO (Reuters) – The Japanese government cut its view of the overall economy in February for the first time since April last year as an extended state of emergency to prevent coronavirus infections affecting consumer consumption.

Analysts expect the world’s third-largest economy to decline in the current quarter as renewed COVID-19 restrictions in Tokyo and some prefectures put pressure on business activity and household consumption .

“The economy is showing some weakness despite continuing to build up in the midst of severe adverse conditions caused by the coronavirus,” the government said in its February economic report.

The government lowered its assessment of consumer spending for the third straight month, saying it has recently shown weakness, with people avoiding eating out and traveling.

But he raised his view on capital spending for the second month in a row, saying it has been “recovering recently”, reflecting an improvement in basic machinery orders.

The government also renewed its assessment of corporate profits for the first time in two months as it was “rising while non-manufacturers see weaknesses” due to the effects of the disease. panoramic.

Manufacturers’ profits improved with the help of production in automated production and demand related to 5G technology, the report said.

Thanks to strong demand for communications equipment, the government raised its focus on imports for the first time in two months.

Japanese stocks rose to a 30-year high this week as advances in the distribution of coronavirus vaccines boosted expectations for a global economic recovery. [.T]

Japan’s economy grew for the second straight quarter in October-December, extending its recovery from its worst recession after earlier last year.

But new emergency measures cloud the outlook, underscoring the challenge facing policymakers in preventing the spread of COVID-19 without choking up the re- fragile animation.

Economy Minister Yasutoshi Nishimura said on Friday that Japan’s October-December yield gap was likely at around 20 trillion yen ($ 189.79 billion), compared to more than 30 trillion yen in July-September.

“Now is the time for fiscal spending and the government must promise not to return firearms,” ​​he told a news conference.

He said the official yield-gap figure will be released next week.

The government estimates that the economy will grow 4.0% in the next fiscal year starting in April, after an expected 5.2% fall in the current fiscal year to March.

($ 1 = 105.3800 yen)