June 19, 2020 / 2:53 AM / 22 days ago

Japan says economy 'almost stopped worsening', raising view for first time since 2018

FILE PHOTO: Pedestrians cast shadows as they make their way at a financial district in Tokyo, Japan, January 26, 2017. REUTERS/Kim Kyung-Hoon

TOKYO (Reuters) - Japan’s government raised its economic assessment in June for the first time since 2018 as a sharp deterioration caused by the new coronavirus outbreak had nearly come to an end.

Although the economy remained in an “extremely severe situation” due to the coronavirus pandemic, it had “almost stopped worsening”, the June report said.

Japan is expected to suffer its worst postwar slump this quarter, but the government’s new economic assessment took heart from signs of improvement in consumer spending and business sentiment after the phased lifting of a state of emergency in late May.

Prime Minister Shinzo Abe declared the emergency in April and asked people to stay home and businesses to close to prevent the virus spreading.

“The economy is still on a slightly downward trend but the sharp deterioration has ended,” said an official at the Cabinet Office, adding that any pick-up in the economy would depend on how jobs and wages pan out.

The government upgraded its view on consumer spending for the first time since January 2018, noting signs of improvement as retailers and restaurants re-opened.

And the government also raised its assessment on business sentiment for the first time since April 2017, saying it was showing signs of picking up too after a service sector sentiment index rose for the first time in May.

But, as external demand remained subdued, the government kept its view on exports, saying they were “falling rapidly” and factory output was also falling.

Reporting by Kaori Kaneko; Editing by Simon Cameron-Moore

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