The Japan’s Cabinet Office recently downgraded its view on the economy for November, citing weak demand as a factor that has weighed on capital spending and consumer expenditure. This downgrade marks the first time in 10 months that such a change has been made. The view on capital expenditure was also cut for the first time since December 2021, noting that the pace of recovery was “pausing.”

In its statement, the Cabinet Office mentioned that “the economy is recovering moderately, although some areas showed stalemate recently.” It also noted that “business conditions and firms’ earnings continue to improve, but the strength of the corporate sector is not necessarily translating into wages and investment.” The statement pointed out that “domestic demand such as corporate investment and consumer spending lack strength,” and expressed the expectation for the economy to continue to recover moderately, while acknowledging risks such as those from global monetary tightening and the Chinese economy.

The statement also highlighted the need for close attention to rising prices, the Middle East situation, and financial market fluctuations. Bank of Japan Governor Ueda commented on this saying “It is important for us to closely monitor these factors and take appropriate measures to ensure stability in the economy.”