Japan govt says econ picking up, but warns of lull

(For more stories on the Japanese economy, click [ID:nECONJP])

* Govt keeps view unchanged, economy picking up steadily

* Govt official warns chance Japan economy may enter a lull

* Govt repeats pledge to work with BOJ to end deflation

By Kaori Kaneko

TOKYO, July 21 (BestGrowthStock) – Japan’s government maintained its
view that the economy is picking up steadily but warned on
Wednesday there is a risk it may enter a lull on a possible
slowdown in overseas growth.

That is a slightly more cautious view than the assessment of
the Bank of Japan, which said last week the economy was showing
increasing signs of a recovery on improvements in overseas
growth.

In its monthly report for July, the government reiterated
that it will work with the BOJ to overcome deflation, which it
described as a top priority.

Japan’s economy has been steadily recovering with the
groundwork being laid for a self-sustained recovery, the
government said in the report, maintaining the view it held in
June, when it revised up its assessment for the first time in
three months.

But it cautioned that not much progress is being made on the
path towards a self-sustained recovery.

“There is a possibility Japan’s economy will enter a lull,”
Keisuke Tsumura, parliamentary secretary at the Cabinet Office,
told reporters.

“There are uncertainties, mainly overseas factors. We would
like to assess the state of the real economy closely,” he said.

The government is closely watching the risk of a possible
slowdown in overseas economies, especially in the United States
and Europe, and market fluctuations hurting Japan’s economy, the
report said.

It is also monitoring the results of stress tests on European
banks, which are expected to be unveiled this week, Tsumura said.

Japan pulled out of recession in April-June last year and the
economy expanded an annualised 5.0 percent in the first quarter
of this year on solid exports to Asia and consumption driven by
government stimulus measures.

But analysts expect growth to slow later this year as the
stimulus effect fades and recent gains in the yen hurt exports.

Still, the government kept its assessment that exports are
increasing moderately. Tsumura said a slowdown in Japan’s exports
to Asia and the United States was noticeable, but not enough to
change the government view.

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Japan govt says econ picking up, but warns of lull