Gov`t says economy in `severe situation,` assessment intact

TOKYO, April 17 Kyodo -
Japan's economy is ''worsening rapidly'' and is ''in a severe situation,'' the
government said Friday, leaving its economic assessment unchanged for the
second straight month due to declining corporate profits and poor employment
conditions.
With regard to short-term prospects, however, the Cabinet Office pointed to
some bright signs in its latest monthly report, saying the pace of
deterioration ''is expected to moderate as inventory adjustment progresses.''
In the April report, the government said exports continued to decline but at a
slower pace than a month earlier. It is the first upward revision in the
office's assessment on exports in about a year and a half.
Economic and Fiscal Policy Minister Kaoru Yosano said at a press conference
that some recent economic indicators such as inventory levels showed signs of
improvement and that stock and foreign currency markets saw some restored
stability recently.
''But we have yet to sense (the economy) has hit the bottom,'' Yosano said.
Public investment remained sluggish but some effects from the government's
economic measures, including a supplementary budget for fiscal 2008, had been
observed, it added.
Still, the office continued to warn that extremely low levels of production
activity could lead to ''significant adjustments in employment.''
The office left its overall economic assessment unchanged from the previous
month, after downgrading its view for five straight months to February to
reflect sharp declines in economic activity.
The office downgraded its assessment of business sentiment, saying it is
deteriorating substantially after the Bank of Japan's latest Tankan survey
showed business confidence among major Japanese manufacturers tumbled to its
weakest level during the three months through March.
On the global economy, the Cabinet Office maintained its view that the global
downturn ''has been rapidly getting severe'' and warned of the risk of further
deterioration.
==Kyodo