TOKYO, Japan, June 8 (NNN-NHK) – The Japanese government, on Friday, maintained its assessment of the economy in April as “worsening,” in line with its view from a month earlier.
According to a preliminary report from the Cabinet Office, its coincident index of business conditions for April rose 0.8 point from a month earlier, to 101.9 against the 2015 base of 100, leading the office to maintain its assessment of the key index as “worsening,” despite the uptick.
The Cabinet Office’s expression “worsening” is the lowest evaluation of the five terms it uses to assess its key index, and was used last month for the first time since between Oct, 2012 and Jan, 2013.
The evaluation, the worst in more than six years, comes as the nation grapples with slumping overseas demand and ballooning social welfare costs, while it also faces the potential fallout from a consumption tax hike, from eight to 10 percent in Oct.
The government said, it will forge ahead with the consumption tax hike, unless there is global economic turmoil on a scale of the Lehman Brothers shock, which triggered the 2008 global financial crisis.
Japan’s economy itself, however, plunged into recession when the government raised consumption tax here to eight percent from five percent in 2014, experts have highlighted, while noting that, despite various iterations of the government’s “Abenomics” brand of economic policies, Japan still has a public debt amounting to more than 236.6 percent of its gross domestic product (GDP).
This is the worst in the industrialised world, with the amount expected to swell, with social welfare costs likely to rise exponentially, as Japan’s population continues to simultaneously age and shrink.
The demographic crisis is owing to the number of senior citizens increasing and the birthrate declining, which has also led to a hollowing out of Japan’s labour force.
The downgrade of the Cabinet Office’s economic assessment last month, indicated that Japan could already be headed into a recessionary phase, economists here said at the time.
This could be severely exacerbated by the Oct tax hike, as businesses and consumers actively tighten their purse strings, to maintain balance sheets, they have since added, pointing to an almost certain slump in domestic demand and consumption.
Looking ahead, the leading index of business conditions, which predicts the trend in the coming months, fell 0.2 point from the previous month at 95.5 in April, underscoring economists’ concerns about the world’s third-largest economy possibly facing a recession.– NNN-NHK
