TOKYO (Reuters) - Japan’s government maintained its upbeat view on the economy and signalled the country is on course to match its second longest period of economic expansion in postwar history, indicating its confidence over a solid, domestic demand-led recovery.
In its monthly report for August released on Monday, the government said the economy “continues to recover moderately as a trend,” a view it has kept for three straight months in a nod to growing signs of strength in consumption and capital spending.
“There’s a strong chance” Japan’s economy will have matched a 57-month expansionary streak marked in the late 1960s, which so far is the second longest postwar economic expansion, Economy Minister Toshimitsu Motegi told reporters.
The government also offered a slightly more upbeat view on public investment compared with a month ago, reflecting an increase in public works projects financed by last year’s supplementary budget.
“Public investment is moving on a firm note,” the report said, compared with the July report’s assessment that it was increasing resilience.
The government kept intact its view that capital expenditure, exports and output were “picking up,” as well as its assessment that consumption was “picking up moderately.”
Japan’s economy expanded at the fastest pace in more than two years in the second quarter — growing at a 4 percent annualised rate — as consumer and company spending picked up, highlighting a long-awaited bounce in domestic demand.
Earlier growth had been heavily reliant on a bounce in exports.
Analysts expect the economy to continue growing at a healthy clip in coming quarters, offering the Bank of Japan hope that a tight labour market will finally start to boost wages and consumer spending.
In Japan, a panel of academics decide retrospectively when the economy entered an expansion or recession by analysing various data. This at times differs from the common definition of recession, which is two straight quarters of contraction.
Under the government’s definition, Japan’s economy has been in an expansionary cycle since December 2012 and will match the second longest postwar expansion in August.
Some ruling party lawmakers have called for another supplementary budget to ramp up fiscal spending. But the government has shrugged off the chance of compiling one for now, arguing that a strengthening recovery makes it difficult to justify additional spending.
“The economy is enjoying a domestic demand-driven recovery,” Motegi told a news conference on Friday.
“Under current economic circumstances, I don’t expect the government to submit a supplementary budget at this autumn’s extraordinary parliament session,” he said.
Additional reporting by Yoshifumi Takemoto; Editing by Kim Coghill