Japan Maintains Severe Assessment of Economy in October

Japan’s government maintained its assessment of the economy in October, saying that conditions remain severe despite signs of improvement as the country continues to roll out measures to support spending amid the coronavirus crisis.

In its monthly report released Friday, the Cabinet Office used the same language to describe the overall state of the economy for a fourth straight month, but said it saw improvement in private consumption. It lowered its assessment for imports.

The assessment comes five months after Japan emerged from a nationwide state of emergency and shows Prime Minister Yoshihide Suga continues to face a tough task to get the economy back to where it was before the pandemic hit.

Activity has improved from the depths of the crisis, but recent data suggest Japan’s recovery will take time. Prices haven’t risen for months even after excluding the impact from a nationwide campaign to discount hotel prices and spur domestic travel and consumption.

Though exports are falling far less, a resurgence in virus cases in Europe and the U.S. could mean a further worsening in the months to come. To support Japan’s economy senior officials have said a third extra budget will be needed.

Analysts surveyed by Bloomberg expect the economy to have rebounded last quarter at an annualized pace of around 16%, following the largest decline on record in the three months through June.

©2020 Bloomberg L.P.

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