In a recent statement, the Japan’s Cabinet Office downgraded its view on the economy for November. This marks the first time in 10 months that such a change has been made, citing weak demand as a factor that has weighed on capital spending and consumer expenditure. The view on capital expenditure was also cut for the first time since December 2021, noting that the pace of recovery was “pausing.”

According to Bank of Japan Governor Ueda, “the economy is recovering moderately, although some areas showed stalemate recently.” The statement from the Cabinet Office also pointed out that “business conditions and firms’ earnings continue to improve, but the strength of the corporate sector is not necessarily translating into wages and investment.” This highlights a concern that domestic demand such as corporate investment and consumer spending lack strength.

The statement also highlighted the need for close attention to rising prices, the Middle East situation, and financial market fluctuations. Despite these challenges, it expressed the expectation for the economy to continue to recover moderately while acknowledging risks such as those from global monetary tightening and the Chinese economy.