The government on Monday maintained its upbeat assessment of Japan’s economy in its monthly report for March released two weeks before a consumption tax hike, but warned that the escalating turmoil in Ukraine has blurred the global economic outlook.
Prime Minister Shinzo Abe’s administration also downgraded its views on the U.S. and Chinese economies, indicating concern that a possible slowdown in the world’s two largest economies may hamper Japan’s attempt to emerge from nearly two decades of deflation.
“The Japanese economy is recovering at a moderate pace,” the Cabinet Office said in its latest monthly economic report, adding, “A last-minute rise in demand before a consumption tax increase is intensifying.”
Tokyo upgraded its assessments of industrial output and imports for the first time in eight months and three months, respectively, given that domestic demand has been growing ahead of the 3-percentage-point tax hike to 8 percent in April.
“Industrial production is increasing with a last-minute rise in demand before a consumption tax increase,” and “imports have been increasing recently,” the government said.
But the Cabinet Office revised downward its view on housing construction for the first time in four months, saying growth “has lost momentum” as demand for real estate — which expanded late last year prior to the tax hike — is already abating.
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