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Japan cuts economic outlook in February for first time in 10 months

Japanese shares rose to a 30-year excessive this week as progress within the distribution of coronavirus vaccines boosted expectations for an financial restoration.

Reuters, Tokyo

PUBLISHED ON FEB 19, 2021 02:18 PM IST

Japan’s authorities reduce its view on the general economic system in February for the primary time since April final yr as an prolonged state of emergency to curb coronavirus infections battered shopper spending.

Analysts count on the world’s third-largest economic system to shrink within the present quarter as renewed restrictions rolled out in Tokyo and a few prefectures final month to include the pandemic harm companies and family spending.

“The economic system reveals some weak spot although it continued selecting up amid extreme situations as a result of coronavirus,” stated the financial report for February.

The federal government slashed its evaluation on shopper spending for a 3rd straight month in February, saying it has proven weak spot just lately, because the emergency harm the retail business as individuals prevented consuming out and travelling.

In the meantime, the federal government raised its view on capital spending for a second consecutive month, saying it has been “recovering just lately”, reflecting an enchancment within the nation’s core equipment orders.

The federal government additionally upgraded its evaluation on company earnings for the primary time in two months as they have been “selecting up whereas weak spot is seen in non-manufacturers” as a result of impression from the pandemic.

Producers’ earnings improved helped by a restoration in auto manufacturing and 5G know-how associated demand, the report stated.

Because of brisk demand for communication units, the federal government raised its outlook on imports for the primary time in two months.

Japanese shares rose to a 30-year excessive this week as progress within the distribution of coronavirus vaccines boosted expectations for an financial restoration.

Japan’s economic system grew for a second straight quarter in October-December, extending the restoration from its worst postwar recession earlier final yr.

However new state of emergency measures cloud the outlook, underscoring the problem policymakers face in stopping the unfold of Covid-19 with out choking off the nation’s fragile restoration.

The federal government estimates the economic system will broaden 4.0% within the subsequent fiscal yr beginning in April after an anticipated 5.2% fall within the present fiscal yr to March.

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