Tokyo is upbeat in its latest assessment of the Japanese economy
In their monthly report, government economists said the recovery looks more certain due to encouraging signs in the global economy
Domestic demand is also improving with companies increasing spending as areas along the earthquake-hit coast slowly rebuild.
In addition spending by private individuals is holding firm, on improving consumer confidence.
“The economy is still picking up slowly, while difficulties continue to prevail due to the earthquake,” the Cabinet Office said in the monthly report.
Progress has been frustratingly slow in rebuilding areas of the northeast coast devastated by last year’s massive earthquake and tsunami. But there are signs of recovery in the area and the broader economy, albeit uneven.
“Domestic demand is on an upward trend … if both domestic and external factors improve, along with the nation’s policy steps such as public spending related to reconstruction and subsidies for fuel-efficient cars, we expect a pickup in the economy will become certain,” said Minoru Masujima, director of macroeconomic analysis at the Cabinet Office.
However, the report also noted several risks facing the economy, including rising oil prices, Europe’s prolonged debt crisis and constraints on power supply with all but two of Japan’s 54 nuclear reactors shut amid public safety fears after the radiation crisis sparked by the disaster.
The government report follows an assessment by the Bank of Japan that was slightly more upbeat than a month earlier. The central bank said Japan’s economic activity was more or less flat but showed signs of picking up.