Japan keeps view economy recovering but warns risk from Middle East

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TOKYO, May 26 : Japan's government retained its assessment in May that the economy was recovering moderately, while warning that tensions in the Middle East and fluctuations in financial markets remain key risks to the outlook.

Here are the main points from the report:

• On private consumption, the assessment was unchanged as "showing movements of picking up", but cautioning that consumer sentiment has been weak recently.

• On business investment, capital spending was again described as "picking up".

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• On exports, the government kept its view as "almost flat". Exports to the Middle East, centred mainly on automobiles, have fallen significantly although they account for only 4 per cent of total shipments.

• On imports, stable on the whole but crude oil imports from the Middle East decreased significantly in April. The government is proceeding with alternative sourcing for crude oil, which it expects to make up for about 80 per cent of the required quantity by June.

• On industrial production, output remains "flat", unchanged from the previous report.

• On corporate earnings, the government struck a slightly upbeat note to say profits "are showing movements of improvement" while urging a watchful eye on the impact of Middle East developments.

• On prices, consumer prices continued to be described as "rising moderately". Corporate goods prices have been "rising recently", it said, from April's "rising moderately".

• On the outlook, the government kept its view that improvements in employment and income conditions, along with the effects of various policies, are expected to support a gradual recovery. The authorities will continue monitoring the impact of the Middle East situation, financial and capital market volatility.

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