Gov't retains economic assessment for 6th straight month+

TOKYO, Jan. 20 Kyodo - The Japanese government maintained its overall economic assessment for the sixth consecutive month Wednesday, saying the nation's economy is ''picking up'' amid rises in stock prices and improvement in housing construction.

The government, however, continued to say that deflation and the severe
employment situation could threaten the nascent recovery and repeated that it
will continue efforts to overcome falling prices in cooperation with the Bank
of Japan.
''Although the economy has been picking up, it is short of autonomous factors
and remains in a difficult situation, such as a high unemployment rate,'' said
the Cabinet Office's latest monthly economic report.
Finance Minister Naoto Kan said at a press conference that high job losses are
the main factor preventing Japan from returning to a sustainable growth path
and that it would be ''difficult'' for the government to revise the assessment
upward as long as the employment situation remains severe.
''As for the risk of (Japan) falling into a double-dip recession, I personally
believe we can manage to avoid it...but the risk has yet to disappear,'' said
Kan, who is also in charge of the nation's economic and fiscal policy.
In the report for January, the government revised upward its assessment on
housing construction for the second consecutive month, saying there are ''signs
of pickups lately.''
The report also showed that the government is less concerned about developments
in financial markets, as it deleted the reference to possible adverse effects
of volatile markets on the economy due to recent rises in stock prices and the
corrections of the yen from an abrupt surge to a 14-year high seen in late
November.
In the December report, the government had said attention should be given to
downward risks to the economy, such as deflation and financial market
developments.
Exports are increasing, mainly to Asia, the latest report said, noting that the
Chinese and Indian economies are ''recovering'' on the back of stimulus
measures, and that the trend is likely to continue for the time being.
The government added its economic assessment of India from this month, given
the growing influence of the nation's economy on Japan. Previously, the
government assessed the economies of overseas regions and countries by
categorizing them into the United States, Europe, China and other Asian
countries.
On other economic components, the government maintained its assessment,
continuing to say that industrial production is picking up and that the pace of
corporate profit falls has become moderate.
Business investment is starting to level off, while weak movements are seen
recently, the report said.
==Kyodo