TOKYO, Sept 13 Japan's government upgraded its
assessment of the economy in September for the seventh time this
year because of rising capital expenditure, in another sign
Prime Minister Shinzo Abe's reflationary policies are boosting
The upgrade in the monthly economic report suggests the
government sees the economy as strong enough to handle scheduled
sales tax increases, although it did moderate its views on
consumer spending and exports.
On deflation, the government's view was unchanged from
August, saying Japan is approaching an end to deflation as
consumer prices excluding fresh food and energy were firming up.
"The Japanese economy is on the way to recovery at a
moderate pace," the government said in its report for September,
offering a more optimistic view than last month when it said
there were some moves towards a sustained recovery.
It said business investment was showing signs of picking up
mainly among non-manufacturers, it said, stronger than last
month's view that capital expenditure was bottoming out.
Earlier this week, economic growth was revised up sharply to
an annualised rate of 3.8 percent in the second quarter as
capital expenditure rose for the first time in a year and a
While domestic demand has been strong in 2013, the
assessment of consumer spending was downgraded as gains have
"This is only a slight downgrade," a government official
told reporters at a briefing.
"We still think consumer spending will continue to improve.
The gains in capital expenditure are also an important factor
for a self-sustained recovery."
The government also lowered its assessment of exports,
saying that recent gains in shipments have started to slow.
On Thursday, a source confirmed reports that Abe has decided
to go ahead with a planned two-stage doubling of the sales tax,
although he will cushion its impact with a support package worth
around 5 trillion yen ($50 billion).
Abe has put fiscal spending, aggressive monetary easing and
economic reforms at the center of his drive to end 15 years of
mild deflation and economic malaise.