Japan keeps view economy recovering but warns risk from Middle East

TOKYO, May 26 (Reuters) - Japan's ‌government retained ​its ​assessment in May that the economy was recovering moderately, while warning that tensions in the Middle East and ‌fluctuations in financial markets remain key risks to the ⁠outlook.

Here are the main points from the report:

• On private consumption, the ‌assessment was unchanged as "showing movements ‌of picking up", but cautioning that consumer sentiment has been weak recently.

• On business investment, capital spending was again described ​as "picking up".

• On exports, the government kept its view as "almost flat". Exports to the Middle East, centred mainly on ⁠automobiles, have fallen significantly although they account for only 4% of total shipments.

• On imports, ​stable on the whole but crude oil imports from the Middle East decreased significantly in April. The ​government is proceeding with alternative sourcing ‌for crude oil, which it expects to make up for about 80% of the required quantity ⁠by June.

• On industrial production, output remains "flat", unchanged from the previous report.

• On corporate earnings, the government struck a slightly upbeat note to ⁠say profits "are showing movements of improvement" while urging a watchful eye on the ​impact of Middle East developments.

• On prices, consumer prices continued to be described as "rising moderately". Corporate goods prices have been "rising recently", it said, from ‌April's "rising moderately".

• On the outlook, the government kept its view that improvements in employment and income ‌conditions, along with the effects of various policies, are expected to ⁠support a gradual recovery. ‌The authorities will continue ​monitoring the impact of the Middle East situation, financial and capital market volatility.

(Reporting by Kaori Kaneko;Editing by ‌Shri Navaratnam)

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