The Japanese government maintains its May economic assessment: moderate recovery continues, with Middle East tensions and financial market volatility as key risks.

⑴ The Japanese government maintained its previous assessment in the May economic review, stating that the economy is moderately recovering, while warning that Middle East tensions and financial market volatility remain key risks for the outlook. ⑵ Regarding private consumption, the assessment remains unchanged at “showing signs of recovery,” but notes that recent consumer confidence has been weak. ⑶ In terms of corporate investment, capital expenditure is once again described as “picking up.” ⑷ On exports, the government maintains its view of “almost flat.” ⑸ For imports, overall stability is noted, but there was a significant decline in crude oil imports from the Middle East in April. The government is advancing alternative procurement of crude oil, expecting to make up about 80% of the required volume by June. ⑹ Regarding industrial production, output remains “unchanged,” consistent with the previous report. ⑺ On corporate earnings, the government holds a slightly optimistic attitude, stating that profits are “showing signs of improvement,” while urging close monitoring of the impact from developments in the Middle East. ⑻ In terms of prices, consumer prices continue to be described as “rising moderately.” The report notes that corporate goods prices are “currently rising,” whereas in April they were described as “rising moderately.” ⑼ As for the outlook, the government maintains its view that improvements in employment and income conditions, along with the effects of policies, are expected to support a gradual economic recovery. Authorities will continue to pay attention to the impact of Middle East developments as well as volatility in financial and capital markets.