Cloudy outlook for economy

要約

In its latest monthly economic report released Aug. 28, the government downgraded its assessment of the economy for the first time since October 2011 when the effects of the European sovereign debt crisis and the strong yen broadsided the economy.

Japan’s exports are slowing against the backdrop of worsening economic outlooks for the United States, Europe, China and the rest of Asia with the exception of India. Consumer spending, which accounts for about 60 percent of Japan’s gross domestic product, is running out of steam.

Instead of taking steps to enliven economic activities, the government has started restraining execution of the fiscal 2012 budget. This is because the Diet has failed to enact a bill to float bonds to cover about 42 percent of the funds for the budget in the midst of confrontations between the ruling and opposition parties. It is deplorable that this situation has been created primarily by the self-centered behavior of the government and the ruling Democratic Party of Japan in the Diet. The ruling and opposition camps should act quickly to end this unusual restriction of the budget execution because it could cause people to suffer.

Among other things, the monthly report by the Cabinet Office pointed to a “further slowing down of overseas economies, and sharp fluctuations in the financial and capital markets.” Economic conditions not only in Europe, which is plagued by the sovereign debt crisis, but also in China and the United States, are negatively impacting Japan’s exports. Through July, exports decreased for three consecutive months from the previous month.

The effects of prolonged deflation continue. In addition, the unstable power supply and higher electricity costs represent downward risks. The government and the Bank of Japan should waste no time in taking necessary measures to buoy the economy.

日本語の抄訳はウィークリ9月22日号のP18に掲載されています。