Gov`t remains upbeat on Japan`s economic recovery: report+

TOKYO, April 16 Kyodo -
The Japanese economy remains on a track of recovery amid improving corporate
sentiment although unemployment rates are still high and price developments are
marking mild deflation, the government said in a monthly report released
Friday, holding its key economic assessment.
''The economy has been picking up steadily,'' the Cabinet Office said in its
April report, using the same expression as last month. It also said the economy
is ''weakly self-sustaining and remains in a difficult situation such as a high
unemployment rate.''
The government had upgraded its assessment of the state of the nation's economy
in March for the first time in eight months.
Speaking after the release of the report, Finance Minister Naoto Kan said that
in order to upgrade the assessment further, the government must confirm a
recovery in domestic business and consumer spending.
''Our focus is on whether (Japan's) growth and recovery is properly
self-sustaining,'' Kan, also minister in charge of economic and fiscal policy,
told reporters, suggesting the ongoing recovery is just maintained by overseas
demand and the government's stimulus policies after the global financial
crisis.
In the latest report, the office said business sentiment is ''improving,''
revising the view higher for the first time in six months.
The robustness was a result of the Bank of Japan's recent Tankan business
sentiment survey. The central bank said earlier this month that business
confidence in the country continued to improve in the three months through
March, helped by pickups in exports and production.
''Exports are increasing moderately. Industrial production is picking up,'' the
office said in the report, keeping intact its earlier views.
But the office also underscored some downside risks, saying, ''Small and
medium-sized enterprises are cautious about the immediate future.''
Public investment is ''weakening'' and the number of corporate failures is
''leveling off,'' the office also warned, downgrading the assessments. The
number of bankruptcies in the construction sector rose in March, given fewer
public works, it said.
As for prices, the report left the wording unchanged, saying their recent
developments underline that the economy ''is in a mild deflationary phase.''
Keisuke Tsumura, a parliamentary secretary of the Cabinet Office, said Thursday
that the government must closely watch various data, while adding, ''There's
still a long way to go before (Japan) beats deflation.''
Asked about possible negative impact on Japanese exports from the recent
massive recalls of vehicles by Toyota Motor Corp., Tsumura told reporters,
''Negative reaction (to Toyota products) can be seen as limited.''
==Kyodo