The Japanese government on Friday revised upward its basic assessment of the country’s economy, describing it as “recovering” for the first time in six years, on the back of robust consumer spending ahead of a planned sales tax hike in April and improvement in business investment.
“The Japanese economy is recovering at a moderate pace,” the Cabinet Office said in its monthly economic report, in which it upgraded its views on three of the 14 categories — consumption, business investment and business failures.
It was the first time for the government to specify the country’s economy is “recovering” since January 2008, before it started to languish against a backdrop of the global financial crisis triggered by the collapse of U.S. investment bank Lehman Brothers Holdings Inc. in September that year.
“In light of their recent behavior, consumers have apparently begun to feel that the economy has been certainly recovering,” economic and fiscal policy minister Akira Amari said at a press conference after the release of the report.
“We decided to raise our economic assessment, believing that the economy is on the verge of entering a virtuous cycle,” where expansion in corporate earnings leads to wage growth, resulting in more consumption as the cycle repeats, Amari added.
Prime Minister Shinzo Abe’s 13-month-old administration — which is trying to beat nearly two decades of deflation — also said in the report that prices are “holding firm,” and it called on the Bank of Japan to achieve its 2 percent inflation goal “at the earliest possible time.”