Japan government downgrades economy view on earthquake

Reuters

By Kaori Kaneko

TOKYO (Reuters) - - Japan's government on Wednesday downgraded its assessment of the economy for the first time in six months, saying it is showing weakness after a devastating earthquake and tsunami last month battered the northeast coast.

Continue Reading Below

The revision is in line with the Bank of Japan, which also cut its assessment of the economy last week in the wake of the March 11 disaster, saying it would remain under "strong downward pressure" for some time.

"The economy is showing weakness recently due to the influence of the Great East Japan Earthquake," the government said in its monthly economic report for April.

That compared with the previous month's report that said the pickup in the economy was only weakly self-sustaining and there was concern about the influence of the quake.

The government also downgraded its views on key aspects of the economy, including exports, industrial production and private consumption, after the disaster and subsequent nuclear safety crisis disrupted supply chains and triggered power shortages.

"The condition of the economy is no longer flat or at a standstill, but rather the direction is downward," said Shigeru Sugihara, director of macroeconomic analysts at the Cabinet Office.

The government expects the weakness to continue for the near term but with a pickup resuming along with a recovery in production, reflecting solid overseas economies and the effects of various policy measures.

The government also warned of downside risks to the outlook that could stem from power supply constraints, slow progress in restoring supply chains and the impact of rising oil prices.

The government also cut its assessment on exports for the first time in four months, saying there are concerns about a decline due to last month's disaster. Previously, it said exports were showing movement toward picking up.

The Cabinet Office also cut its assessment on industrial production for the first time in five months, saying manufacturing activity was stagnating.

The government's monthly report also cut its view on private consumption for the first time in two months, saying that some weakness was seen recently.

(Reporting by Kaori Kaneko; Editing by Edmund Klamann)

What do you think?

Click the button below to comment on this article.