(Provisional translation)

Monthly Economic Report
Executive Summary



(Assessment of the current state of the Japanese economy)

 The Japanese economy shows weakness in some components further, although it remains in picking up in a severe situation due to the Novel Coronavirus.
* Private consumption shows weakness further, especially in service spending.
* Business investment is picking up.
* Exports continue to increase moderately.
* Industrial production is picking up.
* Corporate profits are picking up, although some weaknesses remain in non-manufacturers due to the influence of the infectious disease. Firms' judgments on current business conditions show movements of picking up, although some severe aspects remain.
* Employment situation shows steady movements in some components such as job offers, while weakness remains, due to the influence of the infectious disease.
* Consumer prices show steady movements recently.

  Concerning short-term prospects, the economy is expected to show movements of picking up, supported by the effects of the policies and improvement in overseas economies while the socio-economic activities will be resumed with taking measures to prevent the spread of infectious diseases, and accelerating vaccinations. However, full attention should be given to the further increase in downside risks due to the spread of the infectious diseases. Also attention should be given to the effects of fluctuations in the financial and capital markets.


(Policy stance)


  The Government will make effort toward the reconstruction and revitalization from the Great East Japan Earthquake and coping with disasters becoming ever more severe and frequent. The Government will thoroughly secure people$B!G(Bs lives and livelihoods through protecting employment and keeping businesses with determination to avoid a return to deflation absolutely while taking all possible measures towards prevention of the spread of the Novel Coronavirus. Furthermore, the Government will make intensive investments in four issues, green and digital fields, creation of vibrant communities, and countermeasures against the declining birthrate, and will bring solutions to long-standing problems and will achieve a powerful growth, based on the " Basic Policies for Economic and Fiscal Management and Reform 2021 " and so on.
  The Government decided to implement the state of emergency measures in designate 21 prefectures and priority measures such as for prevention of the spread of disease in designate 12 prefectures until September 12, and will proceed with countermeasures under three pillars; enhancement of medical systems, thorough implementation of infection prevention measures, and vaccinations. The Government will take all possible intensive and efficient support measures for economic impact. Moreover, the Government will achieve a path of economic growth led by private sector through increasing productivity and encouraging continuous wage increases while boldly calling for private investment to growth sectors. The Government will implement the FY2020 third supplementary budget and the FY2021 budget swiftly and properly. Moreover, the Government will continue to implement necessary measures in a flexible manner through utilizing reserve fund according to circumstances and conduct flexible macroeconomic policy management to the self-sustaining economic growth without hesitation, while paying careful attention to the status of the disease and the economic impact.
  The Bank of Japan decided a preliminary outline of a new fund-provisioning measure, through which it provides funds to financial institutions for investment or loans that they make to address climate change issues, on July 16th. The Government expects the Bank of Japan to pay careful attention to the economic impact of the infections and conduct appropriate monetary policy management, and achieve the price stability target of two percent in light of economic activity, prices and financial conditions.