Japanese economic report cites need to closely monitor impact of natural disasters

The Japanese government highlighted the need to closely monitor the impact of recent natural disasters in a monthly report released Thursday, while keeping its basic economic assessment unchanged. The reference to natural disasters was added in the wake of a powerful earthquake that struck Kumamoto Prefecture on July 28 and a downpour in Chiba Prefecture on Aug. 13. The areas affected by the 7.1 magnitude earthquake in Kumamoto host a number of semiconductor and automobile-related factories.

Although production has gradually resumed, the Cabinet Office warned that “the (economic) impact through supply chains should be closely watched.” Regarding the heavy rain in Chiba, the government agency underlined the need to pay attention to the impact on agriculture, forestry and fisheries. In the August report, the government kept its assessment on personal spending, the main pillar of domestic demand, unchanged, saying that the private consumption “shows movements of picking up.” The government also maintained its view on business investment, saying that it is “picking up” steadily thanks to demand related to artificial intelligence. Although housing starts for owner-occupied homes and condominiums remained weak due to rising material and housing prices, the government revised up its view on housing construction, saying that it is “generally flat” thanks to strong demand for rental properties.

The previous report said housing construction was sluggish. The assessment on corporate profits was also upgraded, with the government saying that they are “improving” following solid earnings for April-June, compared with the previous month’s view that they “show movements of improvement.” The government kept its assessment on corporate goods prices unchanged, while noting that they were rising at a slower pace amid the easing of price increases for petroleum-related products, compared with the previous wording that they were rising.