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Japan raises economic view for second month, but wary about resurgence of virus cases

Japan raises economic view for second month, but wary about resurgence of virus casesJapan raises economic view for second month, but wary about resurgence of virus cases
FILE PHOTO: Businessmen wearing protective face masks are seen on a pedestrian bridge in a business district in Tokyo

TOKYO (Reuters) – Japan’s government slightly raised its economic view for a second straight month in July, though authorities conceded that the situation remained severe in light of a renewed spike in coronavirus cases in many parts of the world.

The government described the world’s third-largest economy as “showing signs of picking up” from the COVID-19-induced recession, underscoring cautious optimism among policymakers as more countries have started re-opening their economies following lockdowns to curb the spread of the virus.

Although the global economy has shown some signs of bottoming out recently, analysts say world demand for cars and other durable goods is unlikely to recover strongly given the resurgence of coronavirus cases in major economies.

“The Japanese economy remains in severe situation due to the novel coronavirus, but it is showing signs of picking up recently,” the government said in its economic report for July.

“The pick-up trend in the economy is expected to continue… However, attention should be paid to the risk that domestic and overseas infections would affect economies.” the report added.

Japan’s economy is in the grip of its worst postwar recession as the health crisis takes a heavy toll on business and consumer activity. It is forecast to shrink 5.3% this fiscal year, the biggest contraction in decades, followed by a 3.3% bounce next year, a Reuters poll showed.

With car exports to China, the United States and European Union bottoming out, and with auto production starting to pick up from June, the government raised its view on exports and output.

Shipments were about to stop contracting, and output showed signs of picking up in some industries although it was declining as a whole, the report said.

However, a Cabinet Office official said an exports recovery is unlikely to be very strong.

The government also lifted its view on business sentiment for a second straight month in July to say corporate morale showed the trend towards improvement, a slightly better assessment than the previous month.

(Reporting by Tetsushi Kajimoto; Editing by Shri Navaratnam)

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