Gov't cuts assessment, warns of rapid rise in downward pressure

TOKYO, Nov. 21 Kyodo - The government raised its alert level Friday regarding the nation's economy as it cut its assessment further in the latest monthly economic report, citing a fast increase in downward pressure amid the global financial crisis.

''The economy has weakened further,'' the Cabinet Office said in the November
report. ''Amid a further slowdown in the global economy, the downward pressure
on the Japanese economy is increasing rapidly.''
In October, the office simply noted the further weakness in the economy. It
lowered its economic evaluation for the second straight month in November,
bringing the number of downward revisions this year to six, a Cabinet Office
official said.
The office also revealed its grim outlook for Japan's economy, saying,
''Attention should be given to the risks that the economy...would become
severer due to the worsening global financial crisis, concerns over further
slowdown in overseas economies and large fluctuations of the stock and foreign
exchange markets.''
Economic and Fiscal Policy Minister Kaoru Yosano said at a press conference,
''All the data indicate that Japan's economy has been weakening. The trend is
downward in sync with the situation in the United States, Europe and emerging
economies.''
Yosano said Japan's economy could contract in the current fiscal year through
next March and fiscal 2009, but the government and lawmakers will be tasked
with carrying out steps to beat that pessimistic forecast.
''Japan cannot escape from the movements in the global economy and the
government should be well aware of its role'' in mitigating the adverse effects
from the ongoing global financial crisis, he said.
The November report cut its assessment on exports, saying they are
''decreasing.'' The Finance Ministry's trade data showed Thursday that Japan's
exports fell 7.7 percent in October for the first decline in four months, as
overseas demand waned amid the global economic slowdown.
On the global economy, the latest report downgraded its assessment for the
third straight month, saying the U.S. and European economies are in a downturn
and Asia has been experiencing a slowdown. In the previous October report, it
only said the global economy is slowing.
As in the October paper, the November report said there are ''further downside
risks'' to the world economy due to the current financial turmoil.
By region, the office gave lower grades to Asia and Europe. It said the pace of
expansion in China's economy is ''slowing somewhat'' and that the economy is
''contracting'' in Britain and the 15-nation eurozone economy, warning that
conditions could worsen further in Europe.
As for other aspects of domestic economic conditions, the office retained its
assessments in October.
It continued to acknowledge industrial production is ''decreasing,'' corporate
profits are ''falling,'' business investment is ''in a weak tone'' and the
employment situation is ''getting worse.''
The office repeated the sentence on personal spending, saying, ''While private
consumption is almost flat, some weak movements have been seen lately,''
reflecting recent drops in department store sales.