TOKYO — The Japanese government demonstrated its increasingly cautious stance on the outlook for the global economy in a report issued Friday, indicating the escalating U.S.-China trade tensions, with the two countries set to impose additional tariffs, are at the root of concerns.
However, the Cabinet Office maintained its headline assessment in the August edition of its monthly economic report, saying the Japanese economy, the world’s third largest, is “recovering at a moderate pace” while there was “weakness continuing mainly in exports.”
As to short-term prospects, the monthly report warned that “attention should be given to the effects of the intensified tension over trade issues on the world economy.”
In late August, China pledged to impose additional tariffs of 5 percent or 10 percent on a total of 5,078 U.S. goods worth around $75 billion, some of which would take effect on Sunday and the rest on Dec. 15.
Shortly after Beijing’s announcement, U.S. President Donald Trump said that planned tariffs to be imposed on around $300 billion worth of Chinese imports from Sunday and Dec. 15 will be increased by 5 percentage points to 15 percent.
Trump added the United States will raise tariffs on about $250 billion worth of Chinese products to 30 percent from the current 25 percent from Oct. 1.
In the previous month, the Japanese economic report had said “further attention should be given to the effects of situations over trade issues on the world economy.”
“Additional tariffs between the United States and China could increase uncertainty and have a negative impact on (domestic) business sentiment,” said a government official who briefed reporters.
The Cabinet Office left unchanged its assessment on exports in the latest report, saying they are “in a weak tone.”
The report upgraded its evaluation on public investment for the first time in three months, citing public works projects including those for reconstruction from a series of natural disasters.
The Japanese economy grew an annualized real 1.8 percent in the April-June period, supported by solid consumer spending and capital expenditure, although the pace slowed from the previous quarter amid sluggish exports, government data showed earlier this month.