The Cabinet Office of Japan recently downgraded its view on the country’s economy for November. This marked the first time in 10 months that the Cabinet Office had chosen to lower its assessment. The downgrade was influenced by weaker demand impacting capital spending and consumer expenditure.
In addition to the overall economic downgrade, the view on capital expenditure was also cut for the first time since December 2021. The Cabinet Office stated that the pace of recovery in this area was “pausing.” Despite mentioning that the economy was recovering moderately, some areas were experiencing a stalemate.
The Cabinet Office noted that while business conditions and firm earnings were improving, the corporate sector’s strength was not effectively being translated into wages and investment. Furthermore, domestic demand, such as corporate investment and consumer spending, was stated to lack strength. However, it’s expected that the economy will continue to recover moderately, despite potential risks from global monetary tightening and the performance of the Chinese economy.
The statement emphasized the importance of monitoring rising prices, the situation in the Middle East, and financial market fluctuations. Overall, the outlook for Japan’s economy for November carries concerns about potential risks but maintains an expectation of modest recovery in the coming months.