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Japan’s economic view in August remains unchanged amid virus-linked risks

The Japanese government on Thursday kept its view on the domestic economy in the monthly assessment for August, saying increasing weakness has been seen in some sectors, while warning of downside risks from a current resurgence of COVID-19 infection cases, local media reported Thursday.

The economy shows “further” weakness in some components and stays in a severe situation due to the pandemic, the Cabinet Office said, as the government’s 4th state of emergency over the virus has covered 13 prefectures, and is expected to be expanded to 21 out of Japan’s 47 prefectures from Friday.

The measure only covered Tokyo and Okinawa a month ago.

The wording was used for the fourth straight month following a downward revision in May, when the earlier COVID-19 state of emergency for Tokyo and some other areas was in effect.

Looking forward, the report said the economy is forecast to continue recovering, but warned that full attention should be paid to a “further increase in downside risks” due to the spread of the virus.

“Given factors such as how fast virus cases increase since the beginning of this month along with expansions of the virus state of emergency, we thought we should change the description” for the economic prospect, a government official said.

Under the state of emergency, restaurants and bars are requested not to serve alcohol and close by 8 p.m. local time, while major commercial facilities such as department stores are asked to limit the number of customers allowed in at the same time.

The latest state of emergency is currently set to end on Sept. 12.

By component, the office retained its view that private consumption has shown “further” weakness, especially in services spending. In addition to the surging virus cases, the official said he believes heavy rain across the nation earlier in August also depressed consumer sentiment.

Upgrading the evaluation of corporate profits for the first time since February, the report reveals earnings are “picking up, although some weaknesses remain in non-manufacturers” due to the influence of the COVID-19, while the July report had said they were “picking up as a whole.”

Meanwhile, imports saw downgrading for the first time in 10 months, as the office said they are “pausing” in recovery lately, compared with the July report saying they showed “movements of picking up.”
Source: Xinhua

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