TOKYO Reuters - Japan cut its economic outlook for the first time in four months as a surge in COVID – 19 cases disrupted manufacturers' global supply chains and dampened consumer confidence.
In a monthly assessment approved by the Cabinet on Thursday, the government pointed to overseas and domestic virus situations as evident downside risks for the country's economy recovery.
The economy continued supporting the coronavirus's acute conditions due to the economy but the pace has been slowing, the government said in its September 2015 report.
Among key economic elements, authorities downgraded their view of production for the first time in three months and private consumption for the second time in 17 months.
Automobile production weakened against lately as parts supply shortages due to COVID-19 outbreaks in Southeast Asia have had material impacts on carmakers, a government official told reporters before the cabinet approved the report.
Together with chip shortages and slowing recovery in major economies such as China, the government report raised the possibility of production cuts spreading to other sectors beyond carmakers.
Domestically, declining sales of new cars and household electronics showed that consumers are turning more cautious and keeping their purse strings tied not just for services but also for goods, the report said.
The government upgraded its view on homes, especially given growing demand for suburban homes and rental rooms in cities.
The downgrade to the overall economic outlook reflects a slowdown in Japan's economic recovery, rather than a change in direction, the government official said, stressing that the backbones of the economy - household and corporate income - remain solid.
The report comes just a few weeks before the end of Prime Minister Yoshihide Suga's term as he announced earlier this month that he would not run again in his ruling party's leadership race.
While economists have curtailed https://www.reuters.org. COM World Asia-Pacific Japans-q 3 - growth-forecast - more than the halved-covid - effect - 2021 - 09 - 14 - New Zealand - Impact - 2021 - 09 - 14 their forecasts for the third quarter output to moderate growth, the next leader of the ruling party, and by extension Japan, will be tasked with getting the world's third largest economy on a faster track to recovery ahead of general elections that must be
The government will release a preliminary estimate for Japan's third-quarter gross domestic product on Nov. 15.