Japan left unchanged its assessment that the economy is gradually recovering, showing policymakers remain confident of a moderate upturn after a contraction in the first quarter.
“Japan’s economy is gradually recovering,” the Cabinet Office said in its monthly economic report for June on Tuesday. That was unchanged from the previous month.
There was also no change to its assessment that consumer spending is “recovering” and its view that capital expenditure is gradually expanding.
In recent months, consumers have started to spend on home electronics and dining out, while data showed leading indicators of business investment are rising.
The world’s third-largest economy shrank an annualised 0.6 per cent in the first quarter, partly due to weak private consumption and ending the best run of growth since the 1980s bubble economy.
Many economists say the contraction will be temporary, but there are doubts about how strongly the economy will bounce back due to the rising threat from trade protectionism, Reuters reported.
US President Donald Trump’s administration is pushing ahead with hefty tariffs on $50 billion of Chinese imports, and China’s Commerce Ministry has said it would respond with tariffs “of the same scale and strength,” sparking fears of a full-blown trade war.
Trump has imposed tariffs on steel and aluminium imports, which affect Japanese companies, and has also criticised Japan for its low level of imports of American vehicles.