The Japanese government said Jan. 22 that a record economic expansion had continued for five full years, despite continued weakness in consumption. The Cabinet Office kept its assessment unchanged in its monthly economic report, although critics say the upswing is felt mainly by corporations, leaving behind small businesses and households.
The economy is "recovering, despite some weakness in consumption," the report said, marking the 60th straight month of expansion.
Corporate profits as well as business investment are improving, the assessment said, adding that the employment situation is also getting better on "a broader basis, though some severe aspects remain."
But private consumption was flat, "against the background of sluggish income growth and almost flat consumer confidence," a Cabinet Office official said. The report expressed hope that private consumption would regain momentum if wages recover amid improving employment situations.
Consumer prices were also seen as flat as oil prices have started to fall. The Bank of Japan last week left interest rates unchanged under pressure from the government which said the economy needed more time to recover from a long spell of deflation.
"As for short-term prospects, the economic recovery is expected to continue supported by the domestic private demand as high corporate profits currently observed feed into the household sector," the report said. However, it called for attention to potential effects from oil prices.
Copyright Agence France-Presse, 2007