Japan’s Economy Minister Seiji Maehara said he has a “sense of crisis” as the government downgraded its economic assessment for a third month, the longest streak since the 2009 global recession.
“It’s necessary to take a proper response on both fiscal and financial fronts,” Maehara told reporters in Tokyo today after the government released a report for October.
Today’s reduction underscores concern that Japan’s economy may contract as global demand slows and the expiry of government subsidies for car purchases weakens consumer spending. The International Monetary Fund this week revised down its estimate of world growth for this year, while JPMorgan Chase & Co. and Morgan Stanley predict Japan’s economy will shrink for two consecutive quarters through the end of December.
“I have an extreme sense of crisis about current economic conditions,” Maehara said. “Our biggest issue is the trend of yen appreciation, and the serious suffering this causes exporters,” adding that he would discuss the topic at meetings with the chiefs of the U.S. Federal Reserve and the European Central Bank today.
The yen traded at 78.39 per dollar as of 12:32 p.m. in Tokyo, compared with a postwar high of 75.35 per dollar reached last October. Maehara last week became the first cabinet minister to attend a Bank of Japan meeting in nearly a decade, according to the bank, as he presses for more action to spur growth and defeat deflation.
“The economic recovery is in a weak tone recently due to deceleration of the world economy,” the Cabinet Office said. The cut in the assessment marks the longest run of downgrades since the five months through February 2009.
Japan’s government also cut its view on industrial production for a third month, while it lowered its assessment of business conditions for the first time in 10 months.
“Industrial production is decreasing,” the government said. “Firms’ judgment on current business conditions shows cautiousness,” mainly among manufacturers, the report said.
The Bank of Japan’s Tankan survey last week showed that large manufacturers became more pessimistic as slowdowns in China and Europe sapped export demand. Production fell more than economists had forecast in August.
The government also said economic uncertainty “remains high” for the euro region and Asia, notably China.