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Japan upgrades view on exports and output but flags economic weakness

Kitco News

TOKYO (Reuters) - Japan’s government upgraded its view on exports, factory output and employment in its September economic report but said its overall assessment was unchanged from last month, as the country continues to struggle with the coronavirus pandemic.

The world’s third-largest economy suffered its worst contraction in the postwar era in the second quarter, but it has shown some signs of life since the government lifted a nationwide lockdown in late May.

With consumers and businesses still cautious as the country battles the virus, the government downgraded its view on consumer spending and business expenditure in the monthly report released on Thursday.

“The economy remains in a severe condition due to the coronavirus impact but it is showing signs of picking up recently,” the government said in the report.

Japan’s economy shrank an annualised 28.1% in the April-June period, contracting for a third consecutive quarter.

The government has sought to soften the blow of the pandemic by unveiling a $2 trillion package of stimulus measures this year, while the Bank of Japan has also eased monetary policy further in 2020.

In the report, the government said it upgraded its views on exports and factory output for a third straight month and raised its assessment on the employment situation for the first time since January 2018.

The government said exports were “picking up”, bettering the August assessment that they showed signs of recovery. A rebound in the economies of major trading partners was underpinning Japan’s exports and factory output, the report said.

The number of people in employment was gradually recovering, the government said in the report, an improvement from its August view that the job situation was weak.

But the government downgraded its view on consumer spending for the first time in five months, saying it was “picking up” - as in the August report - but adding that it remained weak, along with business spending.

Despite the downgrade, Economy Minister Yasutoshi Nishimura said he felt the government’s subsidised domestic tourism campaign was supporting consumers’ appetite for spending.

“I feel consumers’ willingness to spend is solid,” he told reporters.

Japan began offering subsidies for national travel discounts in late July to revive tourism, excluding people living or vacationing in Tokyo, which had become a coronavirus hotspot.

The government plans to include Tokyo from next month unless there is a spike in infections there.

Reporting by Kaori Kaneko, additional reporting by Daniel Leussink; Editing by Ana Nicolaci da Costa and Hugh Lawson

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