TOKYO: Japan on Wednesday lowered its economic view for the first time in 10 months, as weak domestic demand weighs on the economy.
The Cabinet Office said in its latest monthly report that the economy “recently appears to be pausing in part” despite recovery at a moderate pace, reported Xinhua.
For the first time in nearly two years, the office cut its view on capital investment, noting in the report that “business investment appears to be pausing for picking up,“ citing flat machinery orders and slowing global growth.
The downgraded view came after Japan’s economy shrank by an annualised rate of 2.1 per cent in the July-September period, marking its first contraction in three quarters, amid drops seen in key gauges of domestic demand.
During the period, Japan’s private consumption fell 0.04 per cent, dropping for the second quarter in a row, as inflation continued to bite in recent months. Meanwhile, capital investment contracted 0.6 per cent, after declining 1.0 per cent in April-June, suggesting that companies continued to cut back on capital spending amid price hikes.
The office described the economy as “recovering at a moderate pace” for six consecutive months until October.
It added that “full attention should be given to price increases, the situation in the Middle East, and fluctuations in the financial and capital markets.”
The country’s Diet deliberations began this week on an extra budget of about US$89 billion for the current fiscal year to next March to fund an economic package aimed at easing the pain of rising prices on households and navigating the economy through the cost-of-living crisis to a longer-term growth path, according to local media reports. –Bernama
