Japan's government kept its assessment of the economy unchanged in a monthly report on Friday but warned of increasing downside risks to growth such as the strong yen and slowing overseas growth. The government also downgraded its view on exports, saying they are increasing at a slower pace as demand for Japanese goods in China and other Asian nations moderates.
"The economy continues to pick up and is moving toward a self-sustained recovery," the government said on Friday in the report for September. "But the environment has become more severe recently," it said, warning of risks such as a slowdown in overseas economies, as well as currency and stock market volatility. Deepening concerns about the US economic outlook and Europe's banking sector woes pushed the yen to a fresh 15-year high against the dollar this week as investors fled risk. Japanese officials have been trying to talk down the yen, even threatening currency intervention, with little success.
"Risks from overseas economies are materialising and that is showing in the slowdown in exports," Keisuke Tsumura, parliamentary secretary of the Cabinet Office, told reporters.
But the government upgraded its assessment on capital spending for the first time in three months, saying it was picking up. In the previous month's report, it said capital expenditure was levelling off.
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