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Economy

Key measure points to 1st Japan economic downturn in 6 years

'Worsening' composite index of economic indicators reinforces fears of recession

Japan has seen a spate of sluggish economic data recently, including falling industrial output amid slowing demand for exports of automobiles and manufacturing equipment.   © AP

TOKYO (Kyodo) -- The government said Monday its key composite index of economic indicators shows Japan's economy "worsening" for the first time in more than six years, reinforcing the view that the world's third-largest economy may have entered a recession.

The Cabinet Office's coincident index of business conditions for March fell 0.9 point from the previous month to 99.6 against the 2015 base of 100, according to a government survey.

An economic downturn is a major setback for Prime Minister Shinzo Abe as his government is poised to raise the consumption tax in October to 10 percent from the current 8 percent, a move that could dampen consumer spending and hurt the economy.

The downward revision of the assessment of the key index by the Cabinet Office came after a recent spate of sluggish economic data, including a 0.9 percent drop in industrial output in March amid slowing demand for exports of automobiles and manufacturing equipment.

The Cabinet Office used the weakest of its five expressions for assessing the key index in describing the economy as "worsening." It last used the word for the index between October 2012 and January 2013.

It cut its economic assessment of the index in January from "weakening" to "signaling a possible turning point" in the economy. The move raised doubt about the government's assertion that growth in the country from December 2012 had likely surpassed the Izanami Boom, a 73-month streak from 2001 to 2008.

A government panel will formally decides the length of the economic cycle after analyzing more data, a process that can take more than a year.

Attention is now focused on whether the government will revise its official view of economic conditions in its monthly economic report for May to be released later in the month.

In the monthly report, the government has maintained that the economy is "recovering at a moderate pace," but added in March that "weakness is seen recently in exports and industrial production in some sectors."

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