TOKYO, April 14: Japan’s government stuck to its view that the economy is recovering in a monthly report on Friday, but said it has yet to emerge from price deflation.

While the content of the report was mostly unchanged from the March report, Economics Minister Kaoru Yosano was confident about Japan’s economic recovery, which will be the second-longest in the post-war era if it continues next month.

I believe the economic recovery will continue for a considerable amount of time given that companies are being prudent about capital spending and inventories, Economics Minister Kaoru Yosano told a news conference.

Helped by the improving economy and greater financial aid for small firms, Japanese corporate bankruptcies fell in the past business year, marking the fourth straight year of decline and their lowest level in a decade, according to data from research firm Tokyo Shoko Research.

The total amount of bankruptcy debt slid 15.7 per cent to 6.1 trillion yen ($51.45 billion) — the first time total debt has fallen below 7 trillion yen in 11 years, it said.

In the April report, the government upgraded its view on exports, which have been underpinned by shipments of electric machinery and chemicals to China and automobiles to the United States. It said exports are rising, omitting a reference in a previous report to exports rising “gradually”.

While acknowledging that consumer prices have been rising year-on-year each month since November, the government reiterated that the economy is still in mild deflation.

Given the rise (in consumer prices) has been supported by rises in energy prices, mild deflation remains despite some improvement, the report said.

Japan’s core consumer price index (CPI) rose 0.5 per cent in February from a year earlier, matching January’s figure and up from rises of 0.1 per cent in November and December.

Such a slow but steady rise in consumer prices, after more than seven years of declines, prompted the Bank of Japan last month to terminate its five-year-old ultra-easy policy of pumping excess funds into the banking system.

The central bank said it would keep interest rates near zero for now, though investors speculate that the BOJ could start raising rates as early as July.

But the government remains cautious about price movements in the world’s second-largest economy.

“We still need to carefully monitor whether consumer prices will continue rising in a stable manner,” said Hiroyuki Inoue, a senior official at the Cabinet Office, which released the report.

Japan’s economy grew 1.3 per cent in the October-December quarter from the previous quarter or an annualised 5.4 per cent — far outpacing a revised 1.7 per cent annualised growth rate in the United States in the same period.

January-March gross domestic product figures will be released on May 19.—Reuters