TOKYO (Reuters) – Japan’s government said on Friday that the economy was recovering moderately in December but warned of risks ahead, such as higher interest rates overseas and policies in the United States.
Among key economic areas, the government cut its assessment on corporate profits for the first time since March 2023 as the pace of its recovery was moderating.
“The economy is recovering moderately, although it appears to be pausing in parts,” the Cabinet Office said in its monthly report.
For the outlook, the government expects moderate recovery to continue thanks to the improving employment and income situation.
But it maintained a cautious view about U.S. policies as President-elect Donald Trump’s new tariff pledge on goods from Canada, Mexico and China threatens the global trade.
Higher interest rates in the U.S. and Europe as well as a stagnant Chinese real estate market could also dent Japan’s economy, the government said.
The report was released after the Bank of Japan kept interest rates unchanged on Thursday.
Among other key economic areas, private consumption, which accounts for more than half of the Japanese economy, was “picking up” supported by wage recovery, the government reiterated in its latest report.
Capital spending was also “picking up” and exports were “almost flat”, the government said, echoing its assessment from the previous month.
