Photo/Illutration Prime Minister Shinzo Abe attends a Cabinet meeting on the monthly economic report at the prime minister’s office on March 26. (Takeshi Iwashita)

The economy has entered a “severe situation” because of the novel coronavirus pandemic, the government said in its monthly economic report, which omitted the expression “recovery” for the first time since July 2013.

The spread of the virus hammered key economic indicators in February and likely ended Japan’s longest uninterrupted postwar period of economic expansion, according to the economic assessment report for March released on March 26.

It was the first downgraded assessment of the economy in three months and the first use of the expression “severe situation” since July 2012.

Seven of 14 categories were downgraded in the latest report, the highest number since comparable data became available in 2001.

For consumer spending, the report downgraded the assessment for the first time in 37 months, saying, “It is showing weakness due to the coronavirus infections.”

In previous reports, consumer spending was described as “recovering.”

The government also downgraded its assessment for investment in plants and equipment for the first time in two months to “almost flat.”

Yasutoshi Nishimura, the Cabinet minister in charge of economic revitalization, said at a March 26 news conference that the moderate recovery trend has clearly changed, and the economy has entered a downward phase.

“The economy has been rapidly deteriorating since February,” Nishimura said.

The government had used “recovery” in its economic assessment reports for six years and nine months.

But since spring last year, many economic indicators showed that Japan was approaching a recession.

However, the government only added minor changes to its overall assessment of the economy and stuck to its basic view that the economy was “recovering at a moderate pace.”

The government acknowledged there are no signs of immediate relief from problems stemming from the novel coronavirus, and that the Japanese economy faces huge downward pressure from the impact of the pandemic.

But the government, for now, wants to refrain from using the word “recession.”

The Cabinet Office makes the final judgment on whether the economy has entered a recession after receiving and examining the analyses from experts.

“The economy is no longer in the phase of recovery,” a senior Cabinet Office official said. “It’s too early to judge if the economy has entered a recession because not enough data is available.”

The government in January 2019 said Japan might have entered its longest postwar period of economic expansion that started in December 2012, when Prime Minister Shinzo Abe started his second administration.

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