By Shigeo Kodama, BridgeNews
Tokyo--Feb. 16--Japan's Cabinet Office said what private economists have been saying for some time as it downgraded its assessment on the world's second largest economy Friday in its February report. "Improvement of the economy has been slower than before," said Haruhito Arai, a Cabinet office official.
"Some concerns, such as the slowing of the U.S. economy, will weigh upon the economy in the future," said Arai.
The downgrading was mainly caused by the slowing of the U.S. economy, he said.
There was more gloomy data when the Japan Department Stores Association announced that Tokyo department store sales in January fell 0.7% from a year earlier to 172.4 billion yen (U.S. $1.49 billion).
Sales in January fell, after having risen both in November and December. The Cabinet Office officially said personal consumption has been leveling in its monthly economic assessment for February released early Friday.
And Japanese shares stayed in negative territory.
The benchmark Nikkei 225 closed ended down 151.90 points, or 1.1% to 13,175.49.
"Persistent concerns over slowing economic growth weighed on the market," said Hiroshi Sato, general manager of the equity and bond department at Cosmo Securities Co.
In its report for February the Cabinet Office said that exports from Japan had been weakening due to slowing of the U.S. economy, and that had made tempo of increases in production slower.
It also noted that personal consumption, seen as a vital spur for sustained recovery, had been basically leveling, and the economy had not gotten out of a severe stage, as seen in high levels of unemployment.
Still, the office noted that corporate profits and capital investment had been increasing, and moves heading toward self-sustainable recovery had continued.
Separately Finance Minister Kiichi Miyazawa said Friday he expected the Group of Seven nations' finance ministers and central bankers at their Saturday meeting in Italy to express concern over Japan's deflation and urge Japan to ensure that its economy grows. However, Miyazawa also said that he did not expect any specific requests on monetary policy. "Everybody is saying that we have to be careful of deflation. We aren't getting any specific policy requests. There will probably be requests for positive growth, but the Bank of Japan recently put forward a new measure," said Miyazawa. The Bank of Japan decided to cut the official discount rate from 0.5% to 0.35% last week, in a move that enraged some powerful politicians who regard the move as a technical adjustment and want a cut to the much more significant overnight call rate from the current 0.25%.