Japan retains econ overall evaluation, cuts show capital

TOKYO - the Japanese Government has maintained its overview of the economy remained weak following the earthquake of March, but downgraded its assessment of capital expenditures in a monthly report released Tuesday.

The constraints of the offer of the Government cited as the reason for the first cut in its notice on since December 2009 capital expenditures, saying that it is no longer pick up but has weakened recently.

The report also highlights the risks for the economic recovery of shortages of supply power possible, slow reconstruction of networks of suppliers and high oil prices.

The Japan economic growth should slow down to 0.6-0.7 per cent this financial year, economy Minister Kaoru Yosano said, clarifying a survey more optimistic forecasts it week last, even though it is still more optimistic than most analysts.

Yosano noted that the official Government forecasts can in addition committed an error on the side of caution, noting that many economists had cut their forecast of 0.5 percentage points, after data last week showed a surprisingly deep economic contraction in the January-March quarter.

The Government will publish revised late June or July official growth forecasts. It currently plans the growth of 1.5% for the fiscal year ending in March.

Yosano said that it will take time for supply chains, particularly those of automobile manufacturers, to be completely restored while the constraints of power supply and the deterioration of the confidence of consumers and businesses were also hit the economy after the earthquake of March triple, tsunami and a nuclear crisis.

Disasters pushed the economy in a second quarter of economic contraction, technically making the Japan in times of recession, although the Government will make its own decision later on whether it considers the economy as being in recession.

Some economists say that the surprisingly low figures in the first quarter increase the risk that the pace of the recovery of the third quarter will be slower than expected.

The Bank of Japan last month cut its forecasts for the current fiscal year to 0.6% of 1.6% predicted three months ago, but has maintained that the economy is likely to resume growth in the second half of the year of growth.

The Japan economy increased by 2.3% for the fiscal year ending in March.