Japan raises economic view as PM pushes "Abenomics"

Wed Jan 23, 2013 10:10am EST
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By Kiyoshi Takenaka

TOKYO (Reuters) - Japan raised its view of the economy for the first time in eight months on Wednesday as private consumption held firm and business sentiment improved, in a sign that Prime Minister Shinzo Abe's policy of easy money and big spending, dubbed "Abenomics", has begun taking effect.

Improvement in exports and recently compiled economic stimulus steps will likely put the economy back on a recovery path, but a slowdown in overseas economies remains a risk factor, the government said in its monthly economic report.

Abe, who led his Liberal Democratic Party to a landslide election victory in December, has called for aggressive monetary easing and heavy fiscal spending to beat persistent deflation, helping to drive down the yen and boosting share prices

The government also said it expects the Bank of Japan (BOJ) to take bold steps to meet a 2 percent inflation goal that the government agreed with the central bank on Tuesday as part of a bold push to escape nagging deflation and to revive the economy.

"The economy is weak, but signs of bottoming out can be seen in some areas," the report said.

That marked an upgrade from last month, when the government said the outlook was weakening due to a slowdown in overseas economies.

Abe's cabinet approved a 10.3 trillion yen ($116.3 billion) stimulus package this month, while the BOJ, in its most determined effort yet to end years of economic stagnation, on Tuesday decided to switch to an open-ended commitment to buying assets next year and double its inflation target to 2 percent.

"(The government) expects the Bank of Japan to promote bold monetary easing so that the price stability target will be achieved as soon as possible," the monthly report said.   Continued...

Japan's Prime Minister Shinzo Abe (R) talks with Finance Minister Taro Aso (C), Economics Minister Akira Amari, and Bank of Japan Governor Masaaki Shirakawa (L), during their meeting at the prime minister's official residence in Tokyo January 22, 2013. REUTERS/Koji Sasahara/Pool