By Daniel Leussink

TOKYO (Reuters) – Japan raised its view on capital spending for the third time this year in its economic report for April, while it retained its assessment that overall economic conditions were showing weakness from the coronavirus pandemic.

Authorities also warned attention should be paid to the downside risk a coronavirus resurgence at home and abroad poses to the economic outlook, which is threatening to leave its mark on the world’s third-largest economy longer.

The government is expected to issue a third state of emergency on Tokyo and three western prefectures this week, underscoring their struggle to deal with a surge in new COVID-19 cases.

The move, which may come as early as Friday, could weigh especially heavy on consumption if the authorities ask retailers to close during the Golden Week holidays, which start next week and run through early May.

“The economy shows some weakness, though it continued picking up amid severe conditions due to the coronavirus,” the government said in the report.

Among its key economic elements, the government improved its view on capital expenditure, after also raising it in January and February, saying it has been picking up, reflecting a more optimistic outlook on corporate spending.

“A reason why it was upgraded is because machinery investment has been improving since the latter half of last year,” a government official added.

The government also lowered its view on public spending, saying it firmly remained at a high level, which was a notch below the previous month’s assessment that described it as holding up strongly.

After coming out of last year’s deep recession due to strong exports, which fuelled an output bounce, analysts expect Japan’s economy to have contracted in the first quarter as private consumption took a hit from emergency steps imposed in January.

The government will release preliminary first-quarter gross domestic product figures on May 18.

(Editing by Jacqueline Wong)