Tokyo, 19 April, /AJMEDIA/
The government on Friday changed the expression for its overall view of Japan’s economy for the first time in eight months, warning that higher U.S. tariffs imposed by President Donald Trump are blurring the outlook for growth.
In its monthly economic report for April, the Cabinet Office also voiced vigilance over the future course of consumer spending, which may languish against a backdrop of sharp price hikes, potentially weighing on the broader economy.
The office, in charge of economic and fiscal policy, maintained its assessment that the Japanese economy is “recovering at a moderate pace,” but added that “the uncertainty arising from the U.S. trade policies and so on exists.”
As for the economic prospects, the government said, “The effects of continued price increases on private consumption through a downturn in consumer sentiment are also downside risks to the Japanese economy,” vowing to take steps to promote wage growth.
Over the past few years, private companies have been raising employee salaries at a significantly faster pace than before, but disposable income among the public has shown little sign of substantial growth amid persistent inflation.
While consumption makes up over half of Japan’s gross domestic product, households have tightened their purse strings as food prices climb. In March, rice prices rose 92.1 percent from a year earlier, the fastest pace since comparable data began in 1971.
Among other components, firms’ assessments of business conditions were downgraded for the first time since March 2022, from “improving” to “almost flat recently,” underscoring their concerns about the possible adverse impact of Trump’s tariffs.
Fears are mounting that the U.S. levies will stifle global trade, dragging down Japan’s export-oriented economy, which prompted the Cabinet Office to revise its wording on the world economy for the first time in nine months.
