Japan sees first signs of recovery since April 2014

Japan on Monday reported signs of a feeble economic recovery on the back of an improvement in overall factory production and private consumption as well as corporate profits and business sentiment.

This is the first time that the monthly economic report of the Cabinet Office reported signs of economic recovery after the recession unexpectedly caused by a sales tax hike last April.

The Japanese economy is on a moderate recovery, as improvement can be seen in the corporate sector. Private consumption as a whole is holding firm while exports have shown movements of picking up recently. Although business investment is almost flat, industrial production is picking up, the Cabinet Office said in a release.

The government report said corporate profits are also showing an improvement although firms see current business conditions as almost flat with some signs of improvement in select areas.

The employment situation also shows a trend toward improvement, the release said, adding that consumer prices, however, remained flat.

It expects the economy to recover in the short term, supported by the effects of downfall in oil prices and the effects of the policies, while employment and income situation show a trend towards improvement.

However, it said, the downside risks of the Japanese economy, including slowing down of overseas economies, remained.

The government said it would now push reconstruction of the losses caused by the tsunami and earthquake while at the same time steadily implementing `Basic Policies for the Economic and Fiscal Management and Reform 2014' and the revised economy revitalisation strategy.

The Shinzo Abe government plans to actively engage local economies to continuously pursue to expand the economic virtuous cycles through directing growing corporate profits towards business investment, wage increase and further improvement in the employment situation, the release added.

The government is also working on a five-point plan for attracting foreign investment and accelerate direct investment into Japan.  It now expects the Bank of Japan to achieve the price stability target of two per cent in light of economic activity and prices.