TOKYO (MNI) – Japan’s government on Tuesday revised down its
overall economic assessment for the first time in 10 months in light of
weaker industrial production and exports.

“The Japanese economy is on its way to a recovery at a moderate
pace partly due to reconstruction demand, while some signs of weakness
are evident,” it said in its August report.

Last month it said, “The Japanese economy is on its way to a
recovery at a moderate pace, reflecting reconstruction demand, while
difficulties continue to prevail.”

Looking ahead, the government offered a cautiously optimism view,
saying, “The movement toward an economic recovery will be affected by
the decelerating overseas economies for the time being but is expected
to continue due to reconstruction demand to some extent.”

The government revised down its assessment of two main drivers of
economic growth.

“Industrial production is leveling off recently,” it said. “Exports
are weaker.”

Minoru Masujima, director of macroeconomic analysis at the Cabinet
Office, told reporters that actual output has fallen short of the
official outlook provided by the Ministry of Economy, Trade and Industry
while that exports, which have a major impact on output, have been

Seasonally adjusted export volume, calculated by the Cabinet
Office, fell 5.0% on the month to 90.9 (against 100.0 for the 2005 base
year) in July, touching the lowest level since 88.4 marked in September

The government revised down its view on overseas economies for the
first time in two months, saying signs of slowing have been spreading
and their recovery has been weak.

China’s GDP rose only 7.6% on the year in the April-June quarter,
posting the lowest growth since +6.6% in the first quarter of 2009 at
the height of the global financial crisis triggered by the collapse of
Lehman Brothers.

The government also downgraded its assessment of consumer spending,
saying it is increasing “at a moderate pace.”

Consumption rose only 0.1% on quarter in April-June, slowing from
+1.2% in Q1.

The government subsidies for buying low-emission vehicles, which
have supported consumption until recently, will be used up by early
September and thus a pullback in spending is inevitable, Masujima said.

But he said such a pullback may be smaller than the one seen in
2010, when similar subsidies totaled Y590 billion, much larger than the
current program totaling Y300 billion
** MNI Tokyo Newsroom: 81-3-5403-4833 **

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