Tokyo - Japan downgraded its assessment of the economy Friday in its monthly report for September for the first time in four months due to weak consumer spending after a controversial tax hike.
“The Japanese economy is on a moderate recovery, while weakness can be seen in some areas,” the Cabinet Office said in the report.
Consumer spending “appears to be pausing recently,” the office said.
The government raised the national sales tax in April to 8 per cent from 5 per cent, the first hike in 17 years, despite strong public opposition.
Average household spending fell 5.9 per cent from a year earlier in July for the fourth consecutive month after the hike, the government said.
“Although some weakness remains for the time being, the economy is expected to recover, supported by the effects of the policies, while the employment and income situation improve,” the office said.
Household income dropped 6.2 per cent in July for the 10th straight month of decline, the government said.
The Japanese economy contracted at an annualised rate of 7.1 per cent in the three months to June, the government said last week. - Sapa-dpa