Japan’s economy appears to be “pausing”, the government says in its Monthly Economic Report published today.
Based on the official “New Growth Strategy”, the Japanese government has decided to implement policies to help the economy achieve a full-scale recovery and to stop deflation.
“Placing top priority on casting off deflation, the government will work as one with the Bank of Japan to launch vigorous and comprehensive policy efforts,” the report says.
The government says it expects the Bank of Japan to support the economy with “appropriate and flexible” monetary policy management.
Earlier this month, the Japanese central bank cut its benchmark interest rate to almost zero in an attempt to stimulate its faltering economy. In September, Japanese authorities intervened in currency markets to weaken the value of the yen against the dollar and boost its export sector. (article continues below)
Against the backdrop of the “grim” economic situation, the government says it is increasingly concerned over the worsening condition of the economy.
Japan’s export sector has struggled for some time and industrial production has also been weak. Unemployment remains severe and the economy is still in a mild deflationary phase.
On a more positive note, the government says that corporate profits, business investment and private consumption are improving.
“As for short-term prospects, although some weak movements can be seen for a while, the economy is expected to be picking up, reflecting improvement in overseas economies and the effects of various policy measures,” the government says. “On the other hand, the risks that the economy is depressed by a possible slowdown in overseas economies and fluctuations in exchange rates and stock prices are increasing.”