TOKYO, March 12 (Reuters) - Japan’s government is expected to cut its assessment of the economy in a monthly report due later this month, two sources familiar with its thinking said, highlighting the widening economic damage from the coronavirus outbreak.
In its monthly report for March expected on the 26th, the government could also remove language describing the economy as recovering moderately or replace it to reflect weakening fundamentals, the sources said.
The government kept its economic view unchanged in February, saying it was recovering at a moderate pace even as weakness centred on manufacturers continued.
Though it lowered its overall assessment four times last year, the government has consistently maintained that the economy was “recovering moderately” since January 2018.
Policymakers haven’t reached agreement yet whether to keep or remove that phrasing, the sources said on condition of anonymity as they were not allowed to discuss the matter publicly.
The government is expected to cut its view on consumption as the service sector in particular takes a large hit from the coronavirus outbreak, which has sent financial markets into a tail spin on worries it could tip the global economy into recession.
It is also likely to take a dimmer view on capital spending and corporate profits, with manufacturers and service-sector firms both seeing growing pressure from the pandemic. Revised data released on Monday showed the world’s third largest economy shrank at the fastest pace in almost six years in the December quarter as a sales tax hike hit consumer and business spending.
Reporting by Izumi Nakagawa and Yoshifumi Takemoto; writing by Daniel Leussink Editing by Shri Navaratnam