TOKYO: Japan's government maintained its assessment that the economy is slowly picking up in a report on Wednesday but saw a brighter outlook than a month ago due to encouraging signs in the global economy.
It also said domestic demand is improving, raising its view on private spending for the second month in a row and its assessment of capital spending for the first time in eight months.
"The economy is still picking up slowly, while difficulties continue to prevail due to the earthquake," the Cabinet Office said in the monthly report.
Progress has been frustratingly slow in rebuilding areas of the northeast coast devastated by last year's massive earthquake and tsunami. But there are signs of recovery in the area and the broader economy, albeit uneven.
The government said private spending was holding firm, citing a resumption of subsidies for purchases of fuel-efficient cars and improving consumer confidence.
It said capital expenditure had picked up recently, upgrading its view for the first time since July last year after data showed companies were ramping up spending as areas along the quake-hit coast slowly rebuild.
Japan's economic recovery is seen as more certain due to U.S. growth picking up and the euro zone's debt crisis showing signs of easing, the government said.
A brighter global outlook is also expected to fuel gains in stock markets and the move back into riskier assets in general should ease upward pressure on the yen, which is often seen as a safe haven in times of market turmoil.
"Domestic demand is on an upward trend ... if both domestic and external factors improve, along with the nation's policy steps such as public spending related to reconstruction and subsidies for fuel-efficient cars, we expect a pickup in the economy will become certain," said Minoru Masujima, director of macroeconomic analysis at the Cabinet Office.
However, the report also noted several risks facing the economy, including rising oil prices, Europe's prolonged debt crisis and constraints on power supply with all but two of the nation's 54 nuclear reactors shut amid public safety fears after the radiation crisis sparked by last year's disaster.
The government report follows an assessment by the Bank of Japan that was slightly more upbeat than a month earlier. The central bank said Japan's economic activity was more or less flat but showed signs of picking up.
The central bank surprised financial markets in February by easing monetary policy, boosting its asset buying scheme, setting a 1 per cent inflation goal, and signalling a more aggressive monetary policy as it struggles to help pull Japan out of deflation.
The yen fell sharply after the easing, relieving some pressure on the nation's exporters. It is now down more than 8 per cent against the dollar so far this year after hitting a record high in late October.
As rebuilding continues, analysts project the economy will grow 1.9 per cent in the fiscal year starting in April after an expected modest contraction in the year ending on March 31.
indiatimes.com
It also said domestic demand is improving, raising its view on private spending for the second month in a row and its assessment of capital spending for the first time in eight months.
"The economy is still picking up slowly, while difficulties continue to prevail due to the earthquake," the Cabinet Office said in the monthly report.
Progress has been frustratingly slow in rebuilding areas of the northeast coast devastated by last year's massive earthquake and tsunami. But there are signs of recovery in the area and the broader economy, albeit uneven.
The government said private spending was holding firm, citing a resumption of subsidies for purchases of fuel-efficient cars and improving consumer confidence.
It said capital expenditure had picked up recently, upgrading its view for the first time since July last year after data showed companies were ramping up spending as areas along the quake-hit coast slowly rebuild.
Japan's economic recovery is seen as more certain due to U.S. growth picking up and the euro zone's debt crisis showing signs of easing, the government said.
A brighter global outlook is also expected to fuel gains in stock markets and the move back into riskier assets in general should ease upward pressure on the yen, which is often seen as a safe haven in times of market turmoil.
"Domestic demand is on an upward trend ... if both domestic and external factors improve, along with the nation's policy steps such as public spending related to reconstruction and subsidies for fuel-efficient cars, we expect a pickup in the economy will become certain," said Minoru Masujima, director of macroeconomic analysis at the Cabinet Office.
However, the report also noted several risks facing the economy, including rising oil prices, Europe's prolonged debt crisis and constraints on power supply with all but two of the nation's 54 nuclear reactors shut amid public safety fears after the radiation crisis sparked by last year's disaster.
The government report follows an assessment by the Bank of Japan that was slightly more upbeat than a month earlier. The central bank said Japan's economic activity was more or less flat but showed signs of picking up.
The central bank surprised financial markets in February by easing monetary policy, boosting its asset buying scheme, setting a 1 per cent inflation goal, and signalling a more aggressive monetary policy as it struggles to help pull Japan out of deflation.
The yen fell sharply after the easing, relieving some pressure on the nation's exporters. It is now down more than 8 per cent against the dollar so far this year after hitting a record high in late October.
As rebuilding continues, analysts project the economy will grow 1.9 per cent in the fiscal year starting in April after an expected modest contraction in the year ending on March 31.
indiatimes.com
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