Japan gov't ups May economic view for 1st time in 10 months

The government on Thursday lifted its view on the Japanese economy for the first time in 10 months, sounding more upbeat about exports and production in May while private consumption remains resilient due to the impact of COVID-19 waning.

In its monthly report for May, the Cabinet Office described the economy as "recovering at a moderate pace," as it upgraded the view on exports for the first time since December 2020.

The government said previously that the world's third-largest economy was "picking up moderately, although some weaknesses are seen." The last time the office used the expression "recovering at a moderate pace" was in February 2020.

The upward revision came after Japan's economy rebounded from a technical recession in the January-March quarter, even though uncertainty remains over the strength of the global economy after aggressive rate hikes in major economies. Financial markets have been on edge amid the U.S. deadlock over its debt limit.

A technical recession is defined as two consecutive quarters of negative growth.

The easing of disruptions in semiconductor supply chains has allowed automakers to ramp up production that had to be cut. The May report said production has shown "signs of picking up," an upgrade from April, and exports are "steady," rather than "in a weak tone" a month earlier.

A revival of inbound tourism has also lifted exports as spending by foreign visitors in Japan is treated as exports.

Private consumption, a major driver of growth, also saw an upward revision the first in 10 months, as the report said it is "picking up."

Rising prices of everyday goods come as a blow to households but consumption has been supported by pent-up demand, especially for services such as dining out and going on trips, economists say.

In early May, the government started treating COVID-19 the same as seasonal flu under the law, meaning that it has no authority to ask those testing positive to stay in hospital or quarantine.

The office continued to warn that "full attention" should be given to inflation and developments in financial markets, but dropped its reference to supply chain bottlenecks.

In the latest report, the global economic view was lifted for the first time since August 2021, saying that it is picking up despite weakness in some regions.

© Kyodo News