Tokyo: Japan on Friday downgraded its assessment of the economy for the first time in five months, as a string of weak data hammers hopes for a quick recovery following Tokyo`s April sales tax hike.
The monthly report acknowledged spending at home had stalled, throwing into question Tokyo`s plans to hike sales taxes again next year.
But it added that depressed conditions were due partly to poor weather -- Japan was inundated with heavy rainfall and a string of typhoons this summer.
"Private consumption appears to be pausing recently," said the report for September.
"Attention should be given to the downside risks of the Japanese economy such as lengthening of the reaction after a last-minute rise in demand and slowing-down of overseas economies."
The gloomier assessment came the same day that Prime Minister Shinzo Abe penned a column in the Wall Street Journal, extolling the virtues of his three-pronged policy blitz to resuscitate Japan`s deflation-plagued economy and saying he would press on with promised reforms.
Abe and his hand-picked Bank of Japan governor Haruhiko Kuroda have been upbeat on the world`s number-three economy despite mounting evidence that the April sales tax hike was damaging its recovery.
Tokyo hiked sales taxes to 8.0 percent from 5.0 percent, the first rise in 17 years, to help pay down one of the world`s heaviest debt burdens.
But Abe now faces a tough choice on whether or not to go ahead with another levy increase to 10 percent next year.
Japan`s economy contracted 1.8 percent on-quarter in the three months to June -- or 7.1 percent on an annualised basis -- its steepest quarterly drop since the 2011 quake and tsunami disaster.
In the Journal column, Abe said more reforms to the highly regulated economy were on the way.
"Some have said that Japan`s structural reforms -- what I call the "third arrow" of Abenomics, alongside the first two "arrows" of monetary and fiscal policy -- are at a standstill and that wage increases aren`t keeping up with price increases," he wrote.
"But there is no reason for alarm. We remain on the path toward a revitalised Japan."
Abe pointed to corporate tax cuts, deregulation of the electricity sectors, and more childcare facilities to help working women as being among the bright spots so far.
"My administration`s growth strategy is paying off. The unemployment rate is now below four percent and the labour market is tightening," he said.
