Gov't leaves economic assessment unchanged for 1st time in 6 months+

TOKYO, March 16 Kyodo - Japan's economy is ''worsening rapidly'' and is ''in a severe situation,'' the
government said Monday, leaving its economic assessment unchanged for the first
time in six months with the country continuing to face grim economic realities.

In its latest monthly report, the Cabinet Office left the overall economic
assessment unchanged from the previous month, after downgrading its view for
five consecutive months to February to reflect sharp declines in economic
activity.
The March report downgraded the office's assessment of corporate profits for
the first time in three months, saying they are ''decreasing very
substantially.'' In February, the office said they are ''falling
substantially.''
Noting continued declines in Japan's exports and production amid the global
economic downturn, Fiscal and Economic Policy Minister Kaoru Yosano told a news
conference, ''We should not be pessimistic, but it is correct to recognize that
the situation is severe.''
Yosano hinted that the government will work out fresh stimulus measures after
hearing the opinions of economists, business leaders and other experts at a
series of meetings through Saturday that kicked off Monday evening.
The latest report modified the description on corporate profits in line with a
recently released quarterly government survey that showed Japanese firms'
pretax profits in the October-December quarter plunged 64.1 percent from a year
earlier, sinking at the fastest pace in 34 years.
A Cabinet Office official said that as firms cut back on production activities,
sales fell and profits plummeted. He warned that the lack of a downward
revision in the government's assessment in March ''does not necessarily mean
economic conditions stopped worsening.''
The report left unchanged expressions for other economic areas, saying exports
and industrial output are ''decreasing very substantially,'' capital spending
is ''decreasing,'' the employment situation is ''getting worse rapidly'' and
private consumption is ''decreasing modestly.''
As for short-term prospects, the report retained the view that the economy is
''likely to continue worsening for the time being'' and that there is a fear
that the rapid reduction of production will lead to significant adjustments in
employment.
On economic conditions overseas, the Cabinet Office downgraded its evaluation
of economic conditions in the United States in view of dismal indicators for
the country's future economic development and uncontained financial unrest.
The report said the U.S. recession ''has become severer and there are growing
risks that the downturn will be prolonged.''
U.S. gross domestic product in the October-December quarter shrank an
annualized real 6.2 percent from the previous three months, marking the fastest
pace of decline in almost 27 years. The nation's unemployment rate shot up to
8.1 percent in February, hitting a more than 25-year high.
Another Cabinet Office official said the United States is set to see its
longest postwar recession as the current contraction from December 2007 is
certain to be longer than the previous longest record of 16 months.
==Kyodo
2009-03-16 23:26:49