Japan downgrades economic assessment as Abe promises reform

Japan downgraded its assessment of the economy yesterday for the first time in five months, as a string of weak data hammers hopes for a quick recovery following Tokyo's April sales tax rise.

The monthly report acknowledged spending at home had stalled, throwing into question Tokyo's plans to increase sales taxes again next year. But it added that depressed conditions were due partly to poor weather - Japan was inundated with heavy rainfall and a string of typhoons this summer.

"Private consumption appears to be pausing recently," said the report for September. "Attention should be given to the downside risks of the Japanese economy such as lengthening of the reaction after a last-minute rise in demand and slowing-down of overseas economies."

The gloomier assessment came the same day that Prime Minister Shinzo Abe penned a column in The Wall Street Journal, extolling the virtues of his three-pronged policy blitz to resuscitate Japan's deflation-plagued economy and saying he would press on with promised reforms.

Abe and his hand-picked Bank of Japan governor Haruhiko Kuroda have been upbeat on the world's No 3 economy despite mounting evidence that the April sales tax rise was damaging its recovery.

Tokyo raised sales taxes to 8 per cent from 5 per cent, the first rise in 17 years, to help pay down one of the world's heaviest debt burdens. But Abe now faces a tough choice on whether or not to go ahead with another levy increase to 10 per cent next year.