RTTNews - Wednesday, the Bank of Japan and the Cabinet office raised their economic assessment for the second straight month as some of the leading indicators suggested that the worst of the recession is over.

In its latest monthly report of recent economic and financial developments, the BoJ said Japan's economic conditions have begun to stop worsening after deteriorating significantly. In May, the central bank had said economic conditions have been deteriorating, but exports and production are beginning to level out.

The assessment was identical to the one expressed along with Tuesday's monetary policy announcement to retain the key interest rate at 0.1%.

The central bank said exports and production have improved recently after substantial decreases. However, business fixed investment has declined substantially, reflecting the significant deterioration in corporate profits. Private consumption and housing investment also weakened as the employment and income situation has become increasingly severe.

According to the report, Japan's economy is likely to show clearer evidence of leveling out over time in the coming months. That was a revision from the earlier view that the pace of deterioration in Japan's economic conditions is likely to moderate gradually, leading to a leveling out of the economy.

The bank also said exports and production are expected to continue recovering due to progress in inventory adjustments at home and abroad.

On the price front, the BoJ now expects domestic corporate goods prices to continue falling gradually for the time being. The annual inflation is expected to be in the negative territory due to a fall in prices of petroleum products and stabilization of food prices. That was a confirmation of the previous month's view on inflation.

With regard to the financial conditions, the central bank said situations have generally remained tight, although there have been signs of improvement.

Elsewhere on Wednesday, the Cabinet Office said the Japanese economy has bottomed out as exports and factory output recovered from sharp declines. The government also raised its view on consumer spending, exports and industrial production.

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