Japanese Finance Minister Kaoru Yosano said he would do his best to keep the jobless rate from rising to a new record, vowing to remain on guard even as the government looked set to upgrade its official view of the world's No 2 economy.
Japan is mired in its worst recession since World War Two but exports and output have shown some signs of recovery, adding to hopes the world-wide slump may be nearing a bottom. Reflecting such hopes, the government is expected to upgrade its economic assessment in May for the first time in more than three years, the Asahi Shimbun newspaper reported on Thursday.
But with the pain spreading to households through falling wages and rising unemployment just ahead of an election, Yosano said the government would keep making efforts to prevent the country's jobless rate from topping a record 5.5 percent.
"Policy co-ordination between the Bank of Japan and the government is going very well," Yosano said at a meeting with business leaders on Thursday. Japan last month unveiled a record $158 billion stimulus spending package, the fourth package in the past year, to ease the effects of a collapse in global demand that has halved Japanese exports.
The BOJ, for its part, has kept interest rates near zero and is buying commercial paper and corporate bonds, among other assets, to help ease corporate financing conditions. In a monthly report due later this month, the government will likely describe the nation's economic deterioration as slowing, the Asahi said without citing sources.
That would be a slightly more upbeat assessment than the previous month, when the government said the economy was continuing to worsen sharply and was in a severe state. Economists polled by Reuters have revised up their near-term forecasts for Japan's economy as exports and production point to signs of bottoming out and government stimulus at home and abroad take effect.
Industrial production rose for the first time in six months in March and is seen climbing further in coming months as exports stop falling. But the recovery is expected to be fragile and more of a reaction to a plunge in global demand late last year than a genuine revival in overseas demand for Japanese goods.
BOJ Governor Masaaki Shirakawa maintained his cautious tone in a speech in London on Wednesday, saying that while the economy was showing signs of recovery, the central bank was closely monitoring developments. Companies are passing on their financial pain to households, boding ill for personal consumption, which makes up more than half of economic activity.
In March, the jobless rate hit a four-year high of 4.8 percent while wage earners' total cash earnings fell from the same month a year earlier at the fastest pace in nearly seven years. The government is trailing in opinion polls ahead of a general election due by October, with the opposition hoping to boost its narrow lead in popularity with a new leader to be appointed this weekend.
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