Japan’s economic system nonetheless ‘worsening’ regardless of enchancment in key index, authorities says


The key index reflecting the current state of the Japanese economy rose in April, but the improvement was not enough to change the government’s assessment that it is “worsening,” the Cabinet Office said Friday.

The office said its coincident index of business conditions for April climbed 0.8 point from the previous month to 101.9 against the 2015 base of 100, amid a recovery in domestic demand and exports of automobiles and motorcycles.

“The figures related to manufacturing components are rising but they were not enough for (the government) to upgrade the assessment,” a Cabinet Office official told reporters.

The latest assessment comes at a sensitive time, with the government planning to raise the consumption tax rate in October to 10 percent from 8 percent, a move that could dampen consumer spending.

The government has said it will go ahead with the tax increase unless the world’s third-largest economy faces a shock on the scale of the financial crisis triggered by the 2008 collapse of U.S. investment bank Lehman Brothers Holdings Inc.

Last month, the Cabinet Office downgraded its economic assessment to “worsening” for the first time in over six years, signaling that the economy is heading into recession.

In January, the office lowered its evaluation from “weakening” to “signaling a possible turning point.”

The move raised doubts among economists about the government’s assertion that the country’s growth from December 2012 had likely surpassed the Izanami Boom, a 73-month streak from 2002 to 2008.

A government panel will formally decide the length of the economic cycle after analyzing more data, a process that could take over a year.

The leading index of business conditions, which predicts the trend in the coming months, was down 0.2 point from the previous month at 95.5 in April.



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