Japan Maintains Economic Assessment, Says Situation Still Grim

Japan’s government held its assessment of the economy steady in August, saying that conditions are improving but remain severe amid a gradual reopening from the coronavirus shutdowns.

In its monthly report released Thursday, the Cabinet Office said it saw improvement in 2 out of 14 economic categories, while keeping its assessment for the rest of the economy unchanged. It now see exports and production as showing signs of “picking up.” In July, it said exports were bottoming out and production “decreasing as a whole.”

The government continued to describe the overall condition as “severe,” three months after Japan emerged from a nationwide state of emergency.

Activity has improved from the depth of the May lockdown, but recent data suggest a mixed and slow recovery. An unexpected drop in machinery orders in June suggests hopes for resilience in capital spending maybe mislaid and inflation stayed flat for a second month in July. The slump in exports is shrinking with a rebound in China trade, but the drop remains in double-digits.

Economists expect the economy to rebound this quarter, following the largest decline on record in the three months through June. The world’s third-largest economy shrank an annualized 27.8% last quarter, as a state of emergency and lockdowns in the country’s major export markets hammered consumer spending, production and exports.

©2020 Bloomberg L.P.

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