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Japan govt upgrades view of industrial production in January
[TOKYO] Japan's government upgraded its view of industrial production and left unchanged its overall economic assessment of moderate recovery as the economy rebounds from a surprise recession last year.
The government's monthly economic report comes amid lingering concerns that a recent collapse in oil prices and other commodities may be a sign that the global economy is weakening.
The report also follows the Bank of Japan's decision to keep its quantitative easing unchanged even though the decline in oil prices will delay meeting its 2 per cent inflation target. "The Japanese economy is in a moderate recovery, while weakness can be seen in private consumption and some other areas," the Cabinet Office said in its report for January, issued on Friday.
It left the overall view unchanged for the third straight month.
Industrial production is recovering, the report said, reflecting manufacturers' bullish forecasts for increased production in December and January.
That marked an upgrade from last month, when the government said industrial production was bottoming out.
The government said it expects oil prices, which have declined by about half since June last year, to help Japan's economy grow as this lowers fuel costs for companies and increases purchasing power for households.
The BOJ sharply cut its inflation forecast on Wednesday but did not expand its quantitative easing, arguing that lower oil prices will help the economy grow faster in the long term.
The Cabinet Office raised its assessment of the housing market, saying it is stabilising. Housing starts and apartment sales plunged last year after the government raised the nationwide sales tax in April.
The government raised the sales tax to raise money for welfare and healthcare spending. The increase helped push the economy into recession last year as consumer spending temporarily slowed.
Many economists say Japan's economy is already growing again due to a recovery in consumption and exports.