TOKYO—As COVID-19 cases have disrupted manufacturers’ global supply chains and weakened consumer confidence, Japan has downgraded its economic view for the first time in four months.
In the monthly assessment approved by the cabinet on Thursday, the government pointed out that the virus situation at home and abroad is a clear downside risk to the country’s economic recovery.
In its September report, the government stated: “Under the severe situation caused by the coronavirus, the economy continues to recover, but the pace has slowed recently.”
Among the key economic factors, the authorities lowered production expectations for the first time in 17 months, and lowered private consumption for the first time in four months.
A government official told reporters before the cabinet approves the report: “Recently, car production has weakened… The shortage of parts supply due to the COVID-19 outbreak in Southeast Asia has had a significant impact on car manufacturers.”
Coupled with chip shortages and slower recovery in major economies such as China, government reports have raised the possibility of production cuts spreading to other industries besides automakers.
According to the report, the decline in sales of new cars and home electronic products in China shows that consumers have become more cautious, maintaining tight wallets not only in terms of services but also in terms of goods.
In view of the growing demand for houses and rental rooms in the suburbs of cities, the government has upgraded its perception of housing construction.
The government official said that the downward revision of the overall economic outlook reflects a slowdown in Japan’s economic recovery, rather than a change in direction, and emphasized that the backbone of the economy-household and business income-remains solid.
The report was released a few weeks before Prime Minister Yoshihide Suga announced earlier this month that he would no longer participate in the leadership campaign of the ruling party.
Although economists lowered their forecasts for output in the third quarter to moderate growth, the next leader of the ruling party, and even Japan, will shoulder the responsibility of putting the world’s third largest economy on a faster recovery track before a general recovery. Task. The election must be held in late November.
The Japanese government will announce preliminary estimates of Japan’s third-quarter GDP on November 15.
Author: Kentaro Komiya
This News Originally From – The Epoch Times