Japan’s government maintained its assessment of the domestic economy while cutting the view of the global economy for the first time in nine months as the debt crisis in Europe deepens and the U.S. recovery shows signs of slowing.
“The Japanese economy is on the way to recovery at a moderate pace partly due to reconstruction demand, although difficulties continue to prevail,” the Cabinet Office said in the monthly report for June released in Tokyo today. “On the whole, there is an increased sense of a slowdown in the global economy.”
The economy will grow 2.2 percent in the year starting April 1, according to the Cabinet’s estimate in December. Domestic demand has been partly supported by the almost 20 trillion yen ($249 billion) in reconstruction spending budgeted by the government since last year’s disaster.
Industrial production and business investment are “picking up slowly,” while corporate profits are improving and exports are “showing signs of picking up,” the government said. “The employment situation is picking up, although it still remains severe partly due to the earthquake disaster.”
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