Japan Ups Economy View for First Time in 9 Months

May 18, 2012
But warns over a strong yen, which is edging back toward the record highs it touched against the dollar last year.

Japan on Friday upgraded its view of the economy for the first time in nine months, a day after better-than-expected growth figures and thanks to a pickup in exports and consumer spending.

But the Cabinet Office's monthly economic report also warned that increasing uncertainty over Europe's financial picture, a strong yen and rising oil prices may hamper a recovery for the world's third-largest economy.

"The Japanese economy is on the way to a recovery at a moderate pace," said the May report.

Tokyo on Thursday released data showing gross domestic product grew by a better-than-expected 1% in the three months to March, offering a glimmer of hope after the global downturn and last year's quake-tsunami disasters.

An uptick in consumer spending was largely due to improved wage conditions and a government subsidy for purchases of fuel-efficient cars, the report said.

Japan's economic expansion comes amid a rise in demand for its products in Asia and a slowly recovering United States, while it was also helped by heavy reconstruction spending in the wake of the March 11 quake-tsunami.

But the report warned over a strong yen, which is edging back toward the record highs it touched against the dollar last year, making Japanese products pricier overseas, while debt turmoil ravages Europe, a key export market.

"Uncertainties over the European crisis and its impact on financial markets are increasing again, and we must be very careful about that," a ministry official said.

Dow Jones Newswires contributed to this report

Copyright Agence France-Presse, 2012

See Also:

Japan Posts Record Fiscal-Year Trade Deficit

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