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Japan's economy 'almost stopped deteriorating': gov't report

Commuters head to work near JR Tokyo Station on May 25, 2020. (Kyodo)

TOKYO (Kyodo) -- apan's economy nearly ceased worsening as it began to reopen following the complete lifting of a nationwide state of emergency over the coronavirus pandemic, the government said in its monthly economic report for June released Friday.

    The government, which said the economy was "worsening rapidly" in its May report, revised its monthly assessment upward for the first time since January 2018.

    "The Japanese economy is still in an extremely severe situation due to the novel coronavirus, but it almost stopped deteriorating," the Cabinet Office said, citing improving private consumption in line with the restart of economic activity across the country.

    The upward revision in the assessment of consumer spending was also the first since January 2018.

    In May, the government said private consumption was "decreasing rapidly," with many Japanese people refraining from going out for nonessential reasons under the government's stay-at-home request.

    The government had described the country's economy as recovering moderately since January 2018 but downgraded its view in March as the pandemic began taking its toll.

    Out of 11 main components of the assessment, the government revised upward its view of private consumption and corporate judgments of business conditions.

    "After a long period of restraints, various economic and social activities are picking up," Yasutoshi Nishimura, minister in charge of economic and fiscal policy, told a press conference after the Cabinet approved the report, adding that domestic demand is "improving after bottoming out in April and May."

    But he also said foreign demand remains sluggish as some other countries are still seeing growing numbers of new infections. "We need to remain vigilant over whether (Japan's) entire economy has put the worst behind it."

    Japan fully lifted on May 25 the nationwide state of emergency first declared in several densely populated prefectures in early April, calling for voluntary restrictions on social and economic activities.

    Effective Friday, restrictions on travel between prefectures were also called off.

    But with consumption recovering only slowly and businesses still facing a long road to return to full capacity, the government maintained its cautious view on corporate capital spending, exports, production and employment, among others.

    "The current economic conditions are far from what we can describe as in a state of 'recovery' and the direction is still downward, but we are no longer seeing a situation in which the economy is expected to continue worsening," a government official told reporters.

    The report said while some short-term improvement can be expected given the government's stimulus measures and reopening of the economy, attention should be paid to "the trend of domestic and overseas infections" and global financial market fluctuations.

    The assessment on firms' views of business conditions was upgraded for the first time since April 2017. The report said it is showing "signs of improvement" even though "some severe aspects remain."

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