Japan lowers economic outlook in February due to slow consumer spending

Posted on February 26, 2024   |  

Japan's government downgrades its economic outlook in February due to slow consumer spending, indicating challenges in exiting the recession.

This is the first downgrade in 3 months, showing ongoing struggles in economic recovery amidst weak wage growth and industrial output.

The government also reduces its assessment of consumer spending for the first time in 2 years, complicating the Bank of Japan's plans to transition from ultra-easy monetary policies.

Japan unexpectedly slipped into recession in the fourth quarter, driven by weakened domestic demand.

The lower consumer spending assessment is due to stalled service spending recovery and decreased spending on non-durable goods, influenced by price increases.

Real wages in Japan have declined for 21 months, as inflation surpasses wage growth, further impacting household spending.