Gov't retains economic assessment but downgrades view on exports

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TOKYO, Feb. 23 Kyodo -
The Japanese government on Tuesday maintained its assessment on the overall
domestic economy for the seventh consecutive month, but downgraded its view on
exports amid rising concern over adverse effects of Toyota Motor Corp.'s
massive recalls of vehicles worldwide.
Reflecting a recent slowdown in shipments of steel and chemical products to
other Asian countries, the government revised its assessment on exports
downward for the first time in 13 months in the monthly economic report for
February.
The report issued by the Cabinet Office said Japan's exports are ''increasing
moderately,'' instead of the previous month's ''increasing'' led by those to
Asia.
Asked about the impact of Toyota's safety problems on the nation's economy,
Finance Minister Naoto Kan told a press conference that such a problem could
affect the economy over ''a wide range'' given the auto industry's influence.
''We need to carefully monitor the effects'' of slowing sales of Japanese
vehicles in some overseas markets, said Kan, who is also in charge of Japan's
economic and fiscal policy.
Keisuke Tsumura, a parliamentary secretary at the Cabinet Office, said it is a
''great disappointment'' to see the adverse effects of Toyota's safety issues
not only on exports but also on domestic auto sales, since the government has
been supporting the auto industry by mapping out incentives for purchases of
greener vehicles.
As for the entire Japanese economy, the government report said, ''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.''
In addition to exports, the report cut its valuation on imports for the first
time in a year, reflecting slower imports of raw materials.
As for public investment, the report said that ''weak movements'' have been
seen lately, cutting its assessment for the first time since August 2002. The
downgrading came after Prime Minister Yukio Hatoyama's government, which took
power in September, canceled some of the public works projects mapped out by
the previous government.
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 declines has become moderate.
Consumer spending is continuing to pick up, but the employment situation
remains severe and the economy is still in mild deflation, the report said.
According to government preliminary data released earlier this month, Japan's
gross domestic product expanded a stronger-than-expected annualized 4.6 percent
during the October-December quarter in real terms, marking the third
consecutive quarter of growth.
But the GDP deflator, a broad gauge of price trends, showed a record 3 percent
annual fall in the quarter, fueling concerns over deflation.
Kan said the 4.6 percent expansion appears to be ''too good,'' adding that
although improvement in the overseas economy and stimulus measures are expected
to help the nation's economy keep improving, attention should be given to such
risks as a further worsening of the employment situation and the influence of
deflation.
==Kyodo
2010-02-23 23:14:33