Japan Economy Recovering Moderately, Gov’t Claims

The Japanese government has maintained its view that the domestic economy is recovering moderately but continued to warn that higher U.S. tariffs are hurting the auto sector, Kyodo News reported.

Japan also downgraded its assessment of corporate bankruptcies for the first time in 33 months, from “almost flat” to “appears to be increasing recently.”

In its monthly economic report for October, the Cabinet Office left its overall assessment unchanged for the second consecutive month, reflecting the recovery of key growth components such as private consumption and capital investment.

However, the report noted that “the effects caused by the U.S. trade policies are seen mainly in the automotive industry,” while adding that exports remain “almost flat.”

After a hefty levy was imposed in April under President Donald Trump, Japan’s U.S.-bound car exports began to decline sharply in July, partly due to a drop following front-loaded shipments, the office said.

In July, Tokyo and Washington struck a deal to reduce the tariff on automobiles from 27.5% to 15%, which took effect in mid-September.

Japan also downgraded its assessment of corporate bankruptcies for the first time in 33 months, from “almost flat” to “appears to be increasing recently,” citing a rise in business failures amid persistent labor shortages.