Japan Upgrades Economic View as it Starts Tentative Opening

(Bloomberg) -- Japan’s government slightly upgraded its assessment of the economy, saying the recession is closer to bottoming out after the lifting of a nationwide state of emergency last month allowed the slow process of reopening to begin.

The economy remains in “an extremely severe situation,” but it has “almost stopped deteriorating,” the Cabinet Office said Friday in its monthly assessment. It was the first time the government had upgraded its view since January 2018.

Businesses see signs of the situation improving, the Cabinet Office said in raising its view of firms’ judgments. Private consumption is now “showing movements of picking up,” it said in another sectoral upgrade.

Japan to Lift Domestic Travel Curbs as It Reopens Further (1)

The slightly less pessimistic report came after the Bank of Japan this week left its main policy levers unchanged, a sign the BOJ is no longer at the peak of crisis fighting.

Prime Minister Shinzo Abe’s government also unveiled a $1.1 trillion stimulus package last month that doubled the size of its total coronavirus-relief measures to about 40% of gross domestic product.

Still, depressing data continue to be released. A report Wednesday showed exports sank further in May as shipments to the U.S. halved. Analysts expect the economy to shrink about 22% this quarter, after also contracting in the previous two.

The government will put together its annual policy blueprints in mid-July, it said in Friday’s report.

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