TOKYO (Reuters – Japan’s overall outlook on its economy remained unchanged in May. The country said that it had shown signs of improvement, and removed a reference about the coronavirus as part of its headline assessment.

In its May economic report, the government stated that “the economy shows signs of picking up”.

The government stated that it was important to consider the downside risk of the Pandemic in China, as well as the potential for a long-term Ukraine crisis.

Following a dramatic drop in Chinese shipments, the government reduced its import assessment. However, it raised its opinion on housing investment and employment.

The government said that they are showing weakness in imports. It was different from the previous description of them being mostly flat.

Japan saw its Chinese imports drop by 20.8% from April, a result of heavy COVID-19 sanctions in China’s major cities. These curbs disrupted supply-chains which paralysed Asia’s leading economy.

The authorities raised their opinion on the employment situation after it fell to 2.6% in March. This was an increase from previous statements that said they were showing weakness.

The government also increased its assessment of housing investment. They said it had largely fallen due to the improvement in apartment building. Housing investment had been previously deemed weakening by the government.

Japan’s economic recovery will be driven by stronger consumer spending. The 1.0% drop in annualized GDP in Japan in January and March was due to the spiking of COVID-19, as well as pressures from rising commodity prices.