The Japanese economy is showing movements towards a pickup and emerging from a recent pause in activity, says the Cabinet Office's monthly economic report. However, it remains in a difficult situation as unemployment remains severe.
The report notes that exports and industrial production are showing movements of picking up. Corporate profits are improving and business investment is picking up, adds the report.
The report further adds that firms' judgment on current business conditions shows a sign of caution. While the employment situation remains severe, movements of an incipient recovery can be seen.
As for short-term prospects, Japan's economy is expected to be picking up, reflecting improvement in overseas economies and the effects of various policy measures. On the other hand, there are downside risks that could stem from movements in overseas economies, foreign exchange rates and oil prices. The report also noted that there is still a risk of the influence of deflation on the economy and a concern about a possible deterioration of the employment situation.
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