TOKYO Jan 23 Japan's government raised its view
of the economy for the first time in eight months on Wednesday
as private consumption is holding firm and business sentiment
shows signs of improvement due to a falling yen and rising share
Improvement in exports and recently compiled economic
stimulus steps will likely put the economy back on a recovery
path, but a slowdown in overseas economies remains a risk
factor, the government said in its monthly economic report.
The government also said it expects the Bank of Japan to
take bold steps to meet a 2 percent inflation goal that the
government agreed with the central bank on Tuesday as part of a
bold push to escape nagging deflation and to revive the economy.
"The economy is weak, but signs of bottoming out can be seen
in some areas," the report said.
That marked an upgrade from last month, when the government
said the outlook was weakening due to a slowdown in overseas
Prime Minister Shinzo Abe, who led his Liberal Democratic
Party to a landslide election victory in December, has called
for aggressive monetary easing by the Bank of Japan and heavy
fiscal spending to beat persistent deflation, helping to drive
down the yen and giving a boost to the stock market.
Abe's cabinet approved a 10.3 trillion yen ($116.3 billion)
stimulus package this month, while the Bank of Japan, under
intense pressure from Abe, on Tuesday decided to switch to an
open-ended commitment to buying assets next year and double its
inflation target to 2 percent.
"(The government) expects the Bank of Japan to promote bold
monetary easing so that the price stability target will be
achieved as soon as possible," the monthly report said.
In the report, the government raised its view on private
consumption for the second month in a row, saying consumer
spending is holding firm.
"Auto sales bottomed in October and were on the rise in
November and December. Car production is recovering as well.
Private consumption is showing signs of bottoming out," a
Cabinet Office official in charge of compiling the report said.
"Corporate leaders' views on business conditions are
recovering against the backdrop of a recent correction to the
yen's appreciation and gains in share prices," he said.
The risk of overseas developments negatively affecting the
Japanese economy has diminished, he added, as the U.S.
government has averted triggering automatic spending cuts and
tax hikes known as the "fiscal cliff" and as a diplomatic row
with China has stopped worsening.
Sino-Japanese relations deteriorated sharply after the
Japanese government in September bought disputed East China Sea
islets, known as the Senkaku in Japan and the Diaoyu in China,
from a private Japanese owner, triggering violent protests
across China and a boycott of Japanese goods.
Although Asia's two biggest economies are still sending
patrol ships to waters near the islands, raising worries that an
unintended collision could escalate into a broader clash,
anti-Japanese demonstrations have subsided.
Japanese automakers including Toyota Motor Corp and
Nissan Motor Co Ltd saw a slow recovery of sales in
China in December as the bruising effects of the territorial
($1 = 88.5400 Japanese yen)
(Editing by Edmund Klamann)