Gov`t upgrades view on Japan economy for 3rd straight month

TOKYO, July 13 Kyodo -
The government upgraded on Monday its assessment of the Japanese economy for
the third straight month, the first time since 2002, citing a pickup in
personal consumption and continued growth in exports.
''The economy has been showing signs of picking up recently while in a
difficult situation,'' the Cabinet Office said in its monthly economic report
for July.
It is the first time since May 2002 that the office has raised its overall
assessment of the economy for the third month in a row, government officials
said.
Supported by stimulus measures and improving overseas demand, the Japanese
economy is slowly but steadily turning around, the officials said, prompting
the office to abandon its assessment in the previous month that signs of a
pickup in economic activity had been observed ''in some areas.''
The office's assessment of private consumption, a key driver of domestic
demand, is likely to draw the most attention.
Consumers are keeping a tight hold on their purse strings against the backdrop
of pay cuts and fears over the deteriorating job environment.
But the office, pointing to recent figures, upgraded its assessment of private
consumption for the second straight month, saying there are signs that personal
consumption has been ''picking up lately,'' led by growing demand for
eco-friendly cars and flat-panel TVs.
The office said the upgrade was mainly attributable to the effects of
government incentives for the purchase of gas-electric hybrid cars and
energy-saving home electronic appliances.
Stimulus measures implemented after the start of the global economic crisis
also helped to improve the state of public investment for the first time since
May, it said.
The office also lifted its assessment of exports for the fourth consecutive
month, saying demand for Japanese products in China and other Asian countries
is strengthening and the decline in shipments to the U.S. and European markets
has come to a halt.
The office either upgraded or maintained its evaluations of all economic areas,
including industrial output and imports, for the first time since January 2008.
Despite these positive signs, the officials said it is too early to claim that
the economy has entered a recovery phase.
To be able to say that, the office would have to confirm that the improvements
in economic activity are likely to be sustained for at least ''five months,''
one of the officials said.
On the release of the previous report, then Economic and Fiscal Policy Minister
Kaoru Yosano virtually declared that the Japanese economy had bottomed out.
But the latest report cautions that economic conditions are likely to remain
severe for some time, warning that the employment situation could worsen
further, and corporate profits and capital spending may not recover markedly
anytime soon.
Yoshimasa Hayashi, economic and fiscal policy minister, said the level of
Japan's economic activity is still very low, although the office raised the
assessment for the third straight month.
''The current situation won't allow us to say that the economy is recovering,''
Hayashi told a news conference, noting that some improvements noticed recently
are based on comparisons with the time of free fall in economic activity early
this year.
''A good rehabilitation is now needed, so to say,'' said Hayashi, who took over
the post from Yosano earlier this month, explaining in analogy that the
Japanese economy ''suffered a traffic accident, was admitted to hospital and
then went through surgery.''
On the overseas economic climate, the government upgraded its overall view for
the first time since May, saying Asian economies, including China, South Korea
and Taiwan, are showing bright signs in particular.
By region, assessments were lifted for Asia and the United States but not for
the eurozone.
==Kyodo