Japan Govt Keeps Basic Economic View Unchanged in July

Tokyo, July 29 (Jiji Press)–The Japanese government Wednesday left its basic economic assessment unchanged in July while keeping a close eye on the fallout from the lingering tensions in the Middle East. “The Japanese economy is recovering at a moderate pace, while attention should be given to the effects caused from the situation in the Middle East,” the Cabinet Office said in its July report, using the same assessment for the fifth straight month. Noting that consumer sentiment has remained weak, a Cabinet Office official underlined the need to boost Japan’s potential growth rate while maintaining stable inflation at around 2 pct to make the economic recovery more tangible to the public. The official also pointed to sharp increases in import prices and producer prices for oil-related products in recent months, while noting that the pass-through of costs to other products has so far been limited. “Cost pass-through to consumer goods, including foodstuffs, may gradually take place from summer through autumn,” the official said, noting that a growing proportion of companies are citing higher packaging materials costs as a reason for raising prices, stemming from rising crude oil prices. The report also said that the production of petroleum products has bottomed out as alternative procurement has progressed. The government agency also kept its assessment on personal spending unchanged, the main pillar of domestic demand, saying, “Private consumption shows movements of picking up.” “Business investment is picking up,” the July report said, also keeping its assessment on the sector unchanged. “Exports have been showing movements of picking up recently,” the government agency said, while describing imports as “flat,” maintaining its assessments on the sectors unchanged. The government said it will implement its fiscal 2026 supplementary budget, enacted last month to minimize economic risks amid tensions in the Middle East, “in an appropriate and flexible manner” in response to regional developments. Regarding domestic corporate goods prices, the government said these are “rising,” rather than the previous month’s assessment that they “have been rising recently,” reflecting a sustained upward trend. Looking ahead, the government reiterated that the improvement in the employment and income situation and the effects of various policy measures are expected to support a moderate economic recovery. Still, the report showed concern over the Middle East situation and fluctuations in financial and capital markets. END [Copyright The Jiji Press, Ltd.]