Japan govt keeps moderately upbeat view on economy in Sept

[TOKYO] Japan's government maintained its moderately optimistic view on the economy, signalling that a recovery is broadening and gathering strength even as inflation remains anaemic.

In its monthly economic report for September released on Monday, the government also maintained its optimism on consumer spending and exports as domestic and external demand drive growth in the world's third-largest economy.

"Japan's economy continues to recover moderately as a trend," the Cabinet Office said in the report, maintaining the assessment for the fourth straight month.

The government kept intact its view that capital expenditure, exports and output were "picking up", as well as its assessment that consumption was "picking up moderately".

The Cabinet Office report comes after Bank of Japan governor Haruhiko Kuroda last week expressed confidence in the economy following the central bank's decision to keep monetary policy unchanged.

Recent data on exports, consumer spending, and the labour market have pointed to an economy growing at a healthy clip.

Analysts expect growth to continue in coming quarters, although inflation has remained stubbornly low, causing some economists to lose faith in the central bank's monetary policy.

Consumer inflation has remained well below the BOJ's 2 per cent target despite over four years of massive stimulus.

The course of economic policy has also been thrown into doubt as sources tell Reuters Japanese Prime Minister Shinzo Abe will soon dissolve the lower house and call a snap election.

Mr Abe's ruling coalition is expected to maintain its majority, but a poor showing at the polls could deplete the government's political capital needed to push through structural reforms.

REUTERS