Japan Says Economy Recovering, but Flags Risks from Trump Trade Policies 

Pedestrians walk along a sidewalk past the Bank of Japan (BoJ) headquarters complex in central Tokyo on March 19, 2025. (AFP)
Pedestrians walk along a sidewalk past the Bank of Japan (BoJ) headquarters complex in central Tokyo on March 19, 2025. (AFP)
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Japan Says Economy Recovering, but Flags Risks from Trump Trade Policies 

Pedestrians walk along a sidewalk past the Bank of Japan (BoJ) headquarters complex in central Tokyo on March 19, 2025. (AFP)
Pedestrians walk along a sidewalk past the Bank of Japan (BoJ) headquarters complex in central Tokyo on March 19, 2025. (AFP)

Japan's government stuck with its cautiously optimistic outlook for the economy US President Donald Trump's trade policies could dampen global growth and higher inflation could hurt consumer spending.

The government maintained its view on the world's fourth-largest economy, saying it is "recovering moderately" in its monthly report for March, citing strong corporate earnings and wage increases which policymakers hope will boost consumption.

"There are US trade policies which could have direct and indirect impact on Japan, so we highlighted them as risks to the economy," said an official at the Cabinet Office.

Trump's wide-ranging tariff actions and pledges including automobiles, steel and aluminium have spurred worries about the global economy. His policies have ignited trade wars with key commercial partners such as China, Canada, Mexico and Europe.

Referring to Japan's potential trade exposure to those economies, the Cabinet Office report said intermediate good exports including electronic devices account for 60% of Japan's goods exports to China.

The ratio of intermediate goods such as auto parts in the nation's goods exports to Mexico accounts for 60%, while those to Canada account for nearly 50%, the report said.

Still, the government retained its assessment on exports, saying they picked up recently for March as Japan's shipments to Asia were on the rise.

Higher prices were also risks to the economy as Japan's nationwide overall consumer price index rose 4.0% in January, the highest in two years, boosted by fresh food prices.

"It is necessary to pay close attention to the impact on consumer spending from rising prices which dampens consumer sentiment," the official said.

The Cabinet Office raised its view on corporate profits for the first time since September 2023, saying they were "improving".

Private consumption, which accounts for more than half of the economy, was picking up, and capital spending was also recovering, according to the report.



US Treasury Chief Dismisses Moody’s Downgrade amid Trump Tax Cut Debate

US Treasury Secretary Scott Bessent speaks during a news conference in Geneva on May 12, 2025, to give details of "substantial progress" following a two-day closed-door meeting between US and China top officials aimed at ending a devastating tariff war. (AFP)
US Treasury Secretary Scott Bessent speaks during a news conference in Geneva on May 12, 2025, to give details of "substantial progress" following a two-day closed-door meeting between US and China top officials aimed at ending a devastating tariff war. (AFP)
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US Treasury Chief Dismisses Moody’s Downgrade amid Trump Tax Cut Debate

US Treasury Secretary Scott Bessent speaks during a news conference in Geneva on May 12, 2025, to give details of "substantial progress" following a two-day closed-door meeting between US and China top officials aimed at ending a devastating tariff war. (AFP)
US Treasury Secretary Scott Bessent speaks during a news conference in Geneva on May 12, 2025, to give details of "substantial progress" following a two-day closed-door meeting between US and China top officials aimed at ending a devastating tariff war. (AFP)

Treasury Secretary Scott Bessent on Sunday dismissed Moody's downgrade of the US sovereign credit rating, as the Republican-controlled Congress tried to push ahead on President Donald Trump's sweeping tax-cut bill.

Bessent, in a pair of television interviews, said the bill's provisions extending the 2017 tax cuts passed under Trump's first term would spur economic growth that would outpace what the nation owed, even as nonpartisan analysts warn the measure it would add trillions to the federal government's $36.2 trillion in debt.

"I don't put much credence in the Moody's" downgrade, Bessent told CNN's "State of the Union" program.

The House of Representatives Budget Committee on Friday rejected the bill, with a handful of Republican hardliners saying they were concerned it did not sufficiently cut spending.

House Speaker Mike Johnson separately said on Sunday the chamber is still "on track" to pass the bill. The committee is set to try again in a rare Sunday night hearing, set to begin at 10 p.m. ET (0200 GMT Monday).

"We've had lots of conversations. We'll have more today," Johnson said on "Fox News with Shannon Bream" when asked about hard-line Republicans Chip Roy and Ralph Norman demanding more spending cuts.

Congressional Republicans in 2017 also argued that the tax cuts would pay for themselves by stimulating economic growth. But the nonpartisan Congressional Budget Office estimates the changes increased the federal deficit by just under $1.9 trillion over a decade, even when including positive economic effects.