Japan’s government maintained its assessment that the economy is still picking up from the March earthquake, with exports weakening recently because of slower global growth.
“There are downside risks that could stem from further slowing down of less resilient overseas economies due to the euro zone crisis, which has been a cause for concern” in financial markets, the Cabinet Office said in a monthly report in Tokyo today. The government left its evaluation unchanged for the third consecutive month.
Japan’s exports fell for the second straight month in November as the stronger yen erodes profits at manufacturers such as Toyota Motor Corp. (7203) The Japanese currency is still hovering near a postwar high against the dollar, prompting the Ministry of Finance to say last month it plans to raise the issuance limit for bills to fund intervention to a record.
The report also stated it was government policy to work with the Bank of Japan to overcome deflation for the first time since February last year. Consumer prices excluding fresh food fell 0.2 percent from a year earlier in November after a 0.1 percent decline the previous month.
“The government will also decisively work to overcome deflation and make an utmost effort to prevent the economy from falling into a vicious cycle between yen appreciation and deflation,” the government said.
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