Japan retains modestly optimist view on economy, overall view unchanged

[TOKYO] Japan's government on Wednesday left unchanged its overall view that the economy is recovering gradually due to a pick up in consumer spending and exports.

The government's assessment comes one day before the conclusion of a Bank of Japan policy meeting, where the central bank is set to raise its economic growth forecasts but cut its rosy inflation outlook.

"The economy is experiencing a moderate recovery," the Cabinet Office said in its monthly economic report for July.

Last month, the Cabinet Office upgraded its overall assessment for the first time since December due partly to improvements in consumer spending.

The government and the BOJ have been upgrading their economic assessments recently as private consumption, capital expenditure, a tight labour market, and growing exports point to solid economic growth.

The Cabinet Office, which helps coordinate economic policy, left unchanged its view that capital spending is recovering, following an upgrade last month.

It also kept its assessment of exports unchanged from last month, saying they are recovering.

Japan's trade-reliant economy grew for a fifth consecutive quarter in January-March, led by solid shipments. Since then, data has suggested that labour demand, which is the highest in four decades, is finally starting to support household spending.

The improved outlook offers hope that after four years of aggressive monetary easing, the Bank of Japan could start to see some progress in sustainably boosting inflation towards its two per cent goal.

REUTERS