The Japanese Finance Ministry raised its assessment of the regional economy for the first time in five years amid a recovery in exports and industrial production.
“Some areas of the economy are showing movements of picking up or leveling out,” the ministry’s local-office chiefs said in a quarterly report in Tokyo yesterday, the first upgrade since April 2004. The economy is in a “severe” state, it said.
A recovery in global demand and Japanese Prime Minister Taro Aso’s ¥25 trillion (US$264 billion) in stimulus measures are increasing confidence that the worst of the nation’s deepest postwar recession is over. Japan’s exports fell at the slowest pace this year last month and a report due tomorrow is expected to show factory output rose for a fourth month.
The ministry upgraded its assessment in 10 of the country’s 11 regions, the report said. It left unchanged its evaluation of Okinawa, saying conditions “remain severe.”
The Bank of Japan said this month it became more optimistic about regional economies for the first time since January 2006.
Japan’s economy probably grew at an annualized 2.4 percent in the three months ended on June 30, the first expansion in more than a year, according to a Bloomberg News survey of economists.
Despite signs that the economy is recovering, all regions said that employment conditions remain severe or are worsening. Japan’s unemployment rate rose to a five-year high of 5.2 percent in May.
Separately, South Korea, Asia’s fourth-largest economy, posted a record current account surplus of just under US$22 billion in the year’s first half, data showed yesterday.
The country’s broadest measure of trade and income was in the black last month for a fifth month running, the central Bank of Korea said, pointing to brisk exports and a sharp fall in imports.
The current account surplus last month was US$5.43 billion, its biggest since a record high of US$6.65 billion in March, the bank said in a report.
The cumulative current account surplus for the first half to last month was a record US$21.75 billion, the bank said.
The current account, which measures trade, service and investment flows with the rest of the world, has been in the black since February.
Lee Young-bog, head of the central bank’s division handling balance-of-payments statistics, said the country would likely post another surplus this month.
“Seasonal factors like summer vacations could prompt the service account deficit to increase,” he told reporters.
“But given expected brisk exports, the country is likely to post a current account surplus of around US$4 billion for July,” Lee said.