Key index points to Japanese economic downturn for first time in six years
The Cabinet Office’s coincident index of business conditions for March fell 0.9 point from the previous month to 99.6 against the 2015 base of 100, according to a government survey.
An economic downturn would be a major setback for Prime Minister Shinzo Abe as his government is poised to raise the consumption tax in October to 10 percent from the current 8 percent, a move that could dampen consumer spending and hurt the economy.
The lowered assessment of the key index by the Cabinet Office came after a recent spate of sluggish economic data, including a 0.9 percent drop in industrial output in March amid slowing demand for exports of automobiles and manufacturing equipment.
The Cabinet Office used the weakest of its five expressions for assessing the key index in describing the economy as “worsening.” It last used that description between October 2012 and January 2013.
It cut its economic assessment of the index in January from “weakening” to “signaling a possible turning point” in the economy. The move raised doubts about the government’s assertion that growth from December 2012 had likely surpassed the Izanami Boom, a 73-month streak from 2002 to 2008.
A government panel will formally decide the length of the economic cycle after analyzing more data, a process that can take more than a year.
Attention is now focused on whether the government will revise its official view of economic conditions in its monthly economic report for May, to be released later in the month.
In the monthly report, the government has maintained that the economy is “recovering at a moderate pace” but added in March that “weakness is seen recently in exports and industrial production in some sectors.”