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Japan raises view on consumption, but says economy in severe situation

Daniel Leussink
·2-min read

By Daniel Leussink

TOKYO, Oct 23 (Reuters) - Japan's government upgraded its view on consumption in a monthly report in October on stronger demand for electronics and higher travel spending, while cautioning broader economic conditions remained severe due to the coronavirus pandemic.

Authorities left unchanged their assessment that the world's third-largest economy was showing signs of picking up from the fallout of COVID-19, which included a hit to Japan's exports from a slump in global demand.

"The Japanese economy remains in a severe situation due to the novel coronavirus, but it is showing signs of picking up," the government said in its October economic report.

Japan's economy suffered its worst postwar contraction in the second quarter, with the government already announcing $2.2 trillion in economic stimulus in response to the virus crisis to soften the blow.

The government said the impact from policy measures at home and improvement in economic activity overseas supported hopes for a continued rebound in the economy.

But it also flagged the risk that coronavirus infections could further weigh on domestic and overseas economies.

While many countries eased coronavirus restrictions earlier this year, some have had to resume curbs as they faced a second wave of infections.

Japan's government upgraded its view on private consumption for the first time in seven months due to more robust domestic demand for household electronics and higher nationwide hotel occupancy rates, especially in Hokkaido in northern Japan.

The government stuck to its assessment that exports are picking up, according to the report.

But it downgraded its view on imports for the first time in seven months due to relatively weak shipments from the United States and the Asian region, a Cabinet Office official said.

The government's assessment of the remaining components in the report remained unchanged.

(Reporting by Daniel Leussink; Editing by Ana Nicolaci da Costa)