Japan lowers factory output forecast due to China’s COVID-19 situation

According to the Cabinet Office's December economic report, Japan is going to keep a close eye on such factors as the spread of COVID-19 in China, economic downturn risks, sharp price increases and supply issues.

It is important to note that the report came out at the time when Japan is struggling with weak global economic growth and expensive imports, both of which had a serious impact on the country's exports and production.

According to the report, the forecast for the factory output declined. The figure deteriorated for the first time in six months. At the same time, the assessment of the overall economy remained the same, with the report noting that its condition is gradually improving.

A Cabinet Office’s official said that the situation in China could adversely affect the supply chain or trades, which in turn would have a negative impact on Japan's economy itself. Similar assumptions have been made before.

The Cabinet's forecasts for other areas have not changed. The report states that private consumption shows moderate growth, and capital spending is gradually recovering.