13 September 2001, 10:55 Japan Cabinet Office leaves assessment unchanged; economy still deteriorating
TOKYO (AFX-ASIA) - The Cabinet Office left unchanged its key
economic assessment, saying the economy continues to deteriorate amid
sustained falls in capital expenditure, exports and industrial output.
"The economy continues to deteriorate," the Cabinet Office said in
the August economic report, put forward to the cabinet this afternoon.
In the previous report, the Cabinet Office asserted that the
economy "is further deteriorating".
Cabinet Office economist Haruhito Arai said the agency simply
"highlighted" the durability of the deterioration by changing its
wording slightly, as recent economic data did not suggest any change in
the pace of the decline.
Arai said the recently released GDP data for the second quarter to
June, which showed the economy contracted by 0.8 pct
quarter-on-quarter, did not affect the assessment in August.
"The data simply endorsed the severe state of the economy," he
said.
The Cabinet Office, meantime, warned of the risk of a "further
slowdown" of the global economy on the future of the already flagging
economy in Japan.
However, Arai stressed that this warning did not refer to any
adverse effects on the global economy following the multiple terrorist
attacks in the US.
The impact of the attacks on "the global capital markets and crude
oil price needs to be monitored closely", he said.
In the August report, the Cabinet Office emphasized continued
pressure in the corporate sector and its spill-over impact on
households.
"The unemployment rate has reached a record high of 5.0 pct, while
job offers and overtime hours worked are continuing to weaken," it
said.
However, Arai said the rise in unemployment does not mean the
extent of the deterioration in the labour market has changed.
The agency maintained its assessment on the trend of private
consumption, saying that it "has remained broadly flat, with weakness
in some data."
"Household spending data showed some rebound, while supply-side
data, such as retail sales, continued to underscore the weakness," Arai
said.
The Ministry of Public Management, Home Affairs and
Telecommunication recently said seasonally-adjusted household spending
rose 1.5 pct in July from the previous month.
But the Ministry of Economy, Trade and Industry said July retail
sales fell 0.6 pct from the previous month.
Elsewhere, the agency said "business investment is falling", adding
that "exports and industrial production have fallen substantially."
All assessments here were left unchanged from the previous month.
The Cabinet Office noted some improvement in levels of inventories
in the August report but Arai questioned the sustainability of such a
development.
"Since the fall in inventory levels was due to good sales of air
conditioners amid extremely hot summer conditions, we are unable to
conclude that inventory has entered a falling cycle," he said.
© 1999-2024 Forex EuroClub
All rights reserved