Japanese Government Downgrades Economic Assessment

Japan’s government lowered its economic assessment and highlighted risks posed by China and a U.S. interest rate hike, adding to signs that a shock from overseas could hurt Japan’s outlook.

The Cabinet Office said in its September report that Japan’s economy was on track to recover but acknowledged some parts of the economy had slowed, striking a less optimistic tone versus last month as consumer spending, exports and capital expenditure proved disappointing.

Prime Minister Shinzo Abe is trying to breathe new life into his economic agenda, and the monthly economic report suggests this task is becoming more urgent as obstacles to achieving strong economic growth multiply.

“There are downside risks to Japan, because China and other emerging Asian countries are slowing as the United States heads toward normalizing monetary policy.

“We need to keep an eye on developments in financial markets.”

The Cabinet Office did not use the word “downgrade” in its monthly report, but a government official told reporters its assessment was more pessimistic compared to last month, when it said the pace of improvement in the economy is patchy.

Via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza