Gov't downgrades monthly assessment as economy weakens 'further'

TOKYO, Oct. 20 Kyodo - The government on Monday downgraded its monthly evaluation of the country's
economy, warning Japan is under growing pressure from the global economic
slowdown and weaker exports.
The economy ''has weakened further,'' the Cabinet Office said in the October
report. It revised the assessment downward from just ''weakening'' adopted the
previous month.
The office also noted gloomier prospects, saying, ''Attention should be given
to the risks that the economy could become worse due to the worsening financial
crisis in the United States and Europe, and large fluctuations of the stock and
foreign exchange markets.''
Economic and Fiscal Policy Minister Kaoru Yosano told reporters, ''I think we
must spend time exercising great patience for the time being,'' adding that the
government will hurry to compile any necessary additional measures to soften
the impact of the worldwide financial storm.
The government's downward assessment coincided with the Bank of Japan's move to
lower its evaluation of the country's regional economies.
The central bank revised downward its assessments of all the nine regions in
its quarterly ''Sakura Report'' released the same day, saying that high energy
and raw material costs have hurt both corporate and consumer sentiment.
The BOJ also said Japan's economic growth is highly likely to remain
''sluggish'' for the time being due partly to weaker exports as the global
economy is slowing.
The Cabinet Office said in its report that exports are ''decreasing
moderately.'' It cited slower Japanese exports to the United States, the
epicenter of the worldwide financial turmoil, as well as to the rest of Asia.
While employment conditions are ''getting worse,'' private consumption is
showing ''some weak movements,'' the office said, downgrading its assessment in
both categories.
It also gave lower grades to production, business sentiment and bankruptcies.
Industrial output is ''decreasing'' as a result of slower exports, the report
said, with a Cabinet Office official adding that electric machinery makers and
other manufacturers face the need to reduce inventories.
Business sentiment is ''deteriorating,'' as made clear by the BOJ's recent
Tankan survey, whose key index dropped to the lowest level in more than five
years during the July-September period, the government said.
The number of bankruptcies is ''increasing,'' especially among real estate and
construction industries -- the sectors most seriously affected by U.S. subprime
mortgage problems.
As for the global economy, the report said it is ''slowing'' and that there are
''further downside risks'' to its growth due to the financial storm,
downgrading its assessment for the second consecutive month.
By region, the United States and Asia were also subject to downgrading.
The U.S. economy is ''receding'' and could face a tougher environment in the
future, the report said. China and some other Asian economies continue to
expand, but a slowdown is being seen in places such as South Korea and
Singapore.
The economies of the 15-nation eurozone and Britain are ''weakening'' and face
higher risks of recession, it said.
==Kyodo