* Weak capex causes downgrade, uncertainty persists
* PM set to call poll Dec. 16, change of govt seen
* BOJ under pressure but may stand pat for time being
TOKYO, Nov 16 Japan's government cut its view of
the economy for a fourth straight month in November, marking the
longest such sequence since the 2008-09 financial crisis and
underlining the view that the country is slipping back into
recession as the global slowdown bites.
Weakening corporate capital spending was the chief culprit
behind the downgrade, the government said as it warned of
persistent weakness in the economy in the face of uncertainty
over the euro zone debt crisis and a slowdown in China.
The downgrade comes as Prime Minister Yoshihiko Noda is due
to dissolve parliament's lower house on Friday for a snap poll
on Dec. 16, likely paving the way for a change of government and
adding to the murky outlook for the world's third-biggest
The government's bleak assessment may add pressure on the
Bank of Japan for further policy easing measures, although
sources told Reuters that the bank is set to hold fire next week
and may sit still until next year to size up the policies of a
"The Japanese economy shows weakness recently due to the
deceleration of the world economy," the Cabinet Office said in
its monthly report.
The previous monthly report had also noted weakness in the
economy but had cited "some steadiness" due to a gradual pickup
in corporate capital spending seen back then.
But the latest report underscored a deterioration in
business expenditures, a key driver of domestic demand and
overall economic cycle.
"Capital spending was the major factor for the downgrade," a
Cabinet Office official in charge of compiling the report said.
"The global economy is showing some bright signs but we
can't be optimistic. Corporate profits are sluggish as falling
exports weigh on output, the corporate mood and capital
In the report, the government raised its view of the world
economy for the first time since February 2011 while noting that
its recovery remains tepid. It sees Japan's exports remaining
weak and factory output decreasing, keeping its view unchanged.
Underscoring concern that domestic demand may lose momentum,
the government cut its view of private consumption and capital
spending for the first time in two months, saying consumption
shows weakness and business investment has a weak tone.
The government also cut its view of corporate profits,
saying that they are flattening further, mainly among
manufacturers. It was also more pessimistic about bankruptcies
and the employment situation.
Japan's economy outperformed most of its Group of Seven
peers in the first half of this year but growth has stalled
since then, with the positive effect of rebuilding from last
year's earthquake fading and the strong yen and the global
slowdown weighing on exports.
The economy shrank in the third quarter for the first time
since 2011 with capital spending posting a bigger-than-expected
fall. Sony Corp and Panasonic Corp have cut
spending plans to cope with massive losses as they struggle with
competitive markets and a strong yen.