Japan raises view on economy for 1st time since July 2022

TOKYO (Reuters) – Japan’s government raised its overall view of the economy for the first time in ten months in May, after recent data showed the country emerged from recession in the first quarter amid a post-COVID consumption rebound.

The Cabinet Office also upgraded its assessment of consumer spending, exports and factory output, suggesting economic and social activities gathered pace.

“The economy is recovering moderately,” the Cabinet Office said in its monthly report published on Thursday, upgrading its view for the first time since July 2022.

Previously, it said the economy was picking up moderately though there was some weakness.

Consumer spending is “picking up”, it added in the report.

Earlier this month, the government reclassified COVID-19 as an infectious disease level on par with the seasonal flu, which helped people to go out for leisure.

“The economy has entered a self-sustainable recovery phase,” said an official at the Cabinet Office. “Overall, the positive movements are spreading in the economy.”

With shipments of auto and auto parts growing as supply disruptions in semiconductors ease, the Cabinet Office raised its view on exports for the first time since December 2020.

Exports are showing “solid movement”, it said, better than its previous view of a “weak tone” in shipments.

The Cabinet Office also made an upward revision on factory output for the first time since August 2022, saying it was showing “signs of picking up”.

It removed a reference to “supply constraints” from risks but kept its caution over the downside risks to the economy amid global monetary tightening, price increase and market fluctuations.

The government expects the Bank of Japan to achieve its 2% inflation target in a sustainable and stable manner backed by wage increases.

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