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Japan gov't retains economic view, but warns of virus resurgence

People sit in the outdoor seating areas of restaurants and bars on April 20, 2021, in Tokyo. (AP Photo/Kiichiro Sato)

TOKYO (Kyodo) -- The government on Thursday retained its view that weakness is seen in some sectors of the Japanese economy in its monthly assessment for April, but warned of downside risks from a recent resurgence of coronavirus infections.

    "The Japanese economy shows weakness in some components" and remains in a "severe situation due to the novel coronavirus," although it continues to show signs of picking up, the Cabinet Office said in its overall assessment, using the same wording for the third straight month.

    The office also retained its view that private consumption has been "in a weak tone recently" and that weakness has been seen in corporate earnings by the nonmanufacturing sector due to the impact of the pandemic.

    Looking ahead, it said the economy is expected to continue picking up but warned "full attention should be given" to a further increase in downside risks due to the spread of the coronavirus in Japan and abroad.

    The warning came as the government plans to impose a fresh coronavirus state of emergency in Tokyo, Osaka and other large cities due to a spike in infections, with tougher restrictions including asking department stores and amusement parks to close temporarily likely to be imposed.

    The latest state of emergency would come just a little over a month since the previous one was lifted in Tokyo and the surrounding area.

    "When compared to a month ago, the risks (to the economy) in the future from a further virus spread are growing again," a government official told reporters, adding that such risks could interrupt the economy's recovery.

    By component, the office upwardly revised its assessment of capital investment as firms are spending more on production facilities including semiconductor-making equipment amid a global chip shortage, while the view on public investment was downgraded.

    Upgrading the evaluation of capital expenditure for the third time this year, the office said investment is "picking up," after saying last month that it was "showing movements of picking up recently."

    Meanwhile, the office cut its view of public investment for the first time in 13 months, saying it "remains stable at a high level," reflecting a decrease in orders at the end of last year, according to the official. The March report said it had remained "solid."

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