Japan on Tuesday maintained the view that its economy is recovering moderately, supported by a resurgence of demand following the lifting of anti-coronavirus curbs, but it remained vigilant against volatility in financial markets after the yen's rapid depreciation.
The Cabinet Office retained the economic view for the fourth straight month in its report. It was more optimistic about business investment but downgraded its view on imports due mainly to slowing inbound shipments from Asia.
The views on other major components of the economy, including private consumption and exports, remained the same.
"The Japanese economy is picking up moderately," the Cabinet Office said in the October report. "Full attention should be given to price increases, supply-side constraints and fluctuations in the financial and capital markets."
The reference to movements in financial markets was reinstated in the September report, after Japan intervened in the currency market by buying the yen with U.S. dollars.
The yen's depreciation to its lowest levels in decades against the U.S. dollar is partly to blame for accelerating inflation that has prompted the government to compile a fresh economic package.
After core consumer inflation jumped 3.0 percent in September from a year earlier, a 31-year high excluding the special effects of sales tax hikes, the October report said consumer prices are "rising."
The brighter view on corporate spending, which the report said is "picking up," comes as many Japanese companies plan to ramp up investment to boost output capacity and promote digitalization and decarbonization beyond the COVID-19 era. The upward revision was the first since February.
Private consumption, another key component of the economy, has been recovering moderately, the report said. The lifting of antivirus curbs has led more people to dine out and go on trips, in a much-awaited boost to the services sector that was pounded by COVID-19.
Monetary tightening in major advanced economies, excluding Japan, has raised recession fears but the October report left its view on the global economy unchanged, saying that it continues to recover.
China reported Monday a 3.9 percent expansion in its gross domestic product for the three months to September, but uncertainty remains over whether the Asian powerhouse can achieve its annual target of around 5.5 percent for 2022.
The GDP data was not taken into account in Japan's latest economic report, a government official said.