Japan Cuts Economic Assessment Amid Emergency Extension

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Japan’s government cut its assessment of the economy for the first time in three months, after the country was forced to extend its third state of emergency following a jump in coronavirus cases.

In its monthly report for May, the Cabinet Office said it saw further weaknesses in some parts of the economy, using stronger language than last month to describe the frailness. Still, it continued to describe overall conditions as improving from a severely low base.

The government downgraded its view of business conditions and also consumer spending, noting weakness in service-related outlays.

Japan May Extend Emergency to A Month Before Olympics, TBS Says

Japan’s domestic economy is mired in a third state of emergency to try to contain the virus, with local media reporting the government may extend restrictions for a second time, until June 20, just about a month before the Tokyo Olympics are set to start.

The emergency is currently scheduled to be lifted at the end of this month, but the number of patients in serious condition has yet to improve much since a recent peak of about 1,300 people nationwide, although overall daily case numbers are declining.

Analysts have warned that dragging out the emergency increases the risk of a double dip recession for Japan, which fell back into contraction last quarter amid another emergency in winter.

For now, economists are still expecting Japan to eke out growth this quarter.

©2021 Bloomberg L.P.

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