Japan reviews economic projections

Japan’s economy has been hit by a slowdown in global demand for technology and semiconductors, as well as the recent resurgence of COVID-19 infections in China. As a result, the government has downgraded its view of the overall economy for the first time in 11 months.

Despite this, the government believes that the economy will pick up going forward, but Japan needs to pay close attention to the impact that China’s spreading infections will have.

This downgrade follows the Bank of Japan’s move last week, in which it also slashed its economic growth projections for the next two fiscal years due to concerns that slowing global demand will weigh on Japan’s export-reliant economy. According to the latest report by the Cabinet Office, the economy is recovering moderately, but some weakness has been seen recently.

The Cabinet Office has also slashed its assessment of exports for the first time since November 2021 and cut its view of imports for the first time in three months. According to the report, both exports and imports are weakening recently compared to its previous view in December 2022. The official at the Cabinet Office stated that the possibility of China’s coronavirus rebound affecting Japan’s exports and production has become clearer than last month.

The government remains cautious about the downside risks from the global economic slowdown, as well as the effects of monetary tightening, inflation, and financial market fluctuations.

However, the Cabinet Office has maintained its assessment of Japan’s domestic demand, stating that private consumption is “picking up moderately” in the latest report. Additionally, the government has said that the recovery in industrial production is stalling, unchanged from its view in December 2022.