Japan has upgraded its economic outlook (assessment) for the first time in over a year, citing signs of improved consumer spending and sparking optimism for a broader recovery.Â
According to the Cabinet Office in its August economic report, the Japanese economy is recovering at a moderate pace, although some areas still seem to be on hold. This marks the first assessment increase since May 2023.
The government noted that consumption is on the rise as the effects of shipping disruptions at certain automakers begin to wane. Additionally, an increase in household disposable income, along with temporary reductions in income and resident taxes, has contributed to this uptick in spending.
However, the extreme heat this summer led to mixed results in consumption patterns. The report indicated that while demand for air conditioning, parasols, and ice cream surged, foot traffic at theme parks and restaurants saw a decline.
Read more: Japan’s wholesale inflation surges to 11-month high as weak yen bites
Furthermore, the report projected a decrease in import prices, primarily linked to a recent correction in the yen’s depreciation.
For the first time in over two years, the government also revised its assessment of housing construction from “in a weak tone” to “almost flat,” citing a cessation in the decline of owner-occupied home construction.
The evaluations for other sectors, including exports, remained unchanged.
This report was shared during a meeting with relevant cabinet ministers and Bank of Japan (BOJ) Governor Kazuo Ueda. Earlier this month, government data revealed that Japan’s economy grew at a much faster-than-expected annualized rate of 3.1 percent in the second quarter, largely driven by a significant rebound in consumption following a downturn at the start of the year.
For more economy news, click here.
