* Govt says some movement toward self-sustainable recovery
* Recent price developments show deflation is abating
* Govt raises views on capex, factory output and corp
sentiment
TOKYO, July 23 (Reuters) – Japan’s government raised its
view on the economy for a third straight month in July and said
deflation was abating as a result of the nation’s expansionary
policy mix of monetary easing and generous spending.
The upgrade reflects the impact of policies adopted by Prime
Minister Shinzo Abe, who vowed on Monday to stay focused on
reviving the stagnant economy after his coalition scored a
strong victory in Sunday’s upper house election.
The government also upgraded its assessment on capital
spending, factory output and business sentiment as confidence is
recovering and a softer yen helped to boost corporate earnings.
“The economy is steadily picking up and it shows some
movement towards a self-sustainable recovery,” the Cabinet
Office said in its monthly economic report on Tuesday.
Last month’s report had already acknowledged that the
economy was picking up.
“Recent price developments indicate that deflation is
easing,” the report said, an encouraging sign for Abe, who has
been striving to overcome 15 years of deflation.
The assessment is in line with that of the Bank of Japan,
which has said the world’s third-largest economy is finally
recovering, boosted by the effects of a weakening yen and its
massive monetary stimulus.
“We need further recovery in firms’ capital spending and the
income situation” before the recent bright signs in the economy
can be termed a clear recovery, a Cabinet Office official said.
The government raised its view on capital spending for the
first time in four months, saying it was “levelling off and
shows some movement towards picking up”.
Industrial production was “increasing at a moderate pace”
with the government upgrading its assessment for a third
straight month.
Business sentiment was improving, it said, marking the first
upgrade in five months.
The government repeated that the economy will continue to
recover as improved corporate profits will feed into household
income and business investment and exports would also recover.
(Reporting by Kaori Kaneko; Editing by Ron Popeski)
