© . FILE PHOTO: People walk into a building in Tokyo, Japan, Jan. 23, 2019. REUTERS/Issei Kato TOKYO () – In April, the Japanese government improved its outlook on the economy for the first time in four months as authorities became more optimistic about the outlook for private consumption after the end of the COVID-19 restrictions, the monthly economic report showed on Thursday. However, private sector analysts have said the outlook is still clouded by challenges, including a relentless rise in commodity and energy prices, which could further slow the recovery of the world’s third-largest economy from the pandemic. “The economy appears to be picking up as the serious situation from COVID-19 eases,” the government said in its April report, removing a reference to “some weaknesses in the recovery” in the March issue. The overall upgrade was largely due to a better assessment of private consumption, which was also the first upgrade since December, as policymakers welcomed the lifting of months-long coronavirus restrictions on personal services by March 21. showed an increase in the consumption of services such as restaurants, travel and hotels towards the end of March,” a government official told a media briefing before Prime Minister Fumio Kishida’s cabinet approved the report. However, rising energy and food prices have dampened consumer confidence even now. Japan will enter an annual holiday week in early May. “The likelihood of a ‘revenge spending’ eruption is lower than we previously expected” as lingering uncertainties surrounding the crisis in Ukraine and COVID-19 keep households cautious about spending, it said the official. The recent weakening of the yen to its 20-year low has exacerbated inflation pain for consumers and domestically oriented businesses by driving up import costs.In the risk assessment section of the April report, the government cited “volatility in the financial and capital markets” among other downside risks to the economy, such as ls rising commodity prices and supply constraints, repeating the previous month’s description. The note was intended to feature currency movements, the official said, although he added that the government has not yet confirmed data on the impact of the latest weakening of the yen on economic fundamentals. The government also raised its assessment of public investment for the first time since July 2020 based on robust public works data.
