Japan says economy recovering at moderate pace ahead of consumption tax hike

Japan's economy continues to recover at a moderate pace ahead of the consumption tax hike from April, the Japanese government said Monday in its monthly economic report for March.

"The Japanese economy is recovering at a moderate pace," the Cabinet Office said in the report, adding, "A last-minute rise in demand before a consumption tax increase is intensifying."

The Cabinet Office maintained its upbeat assessment of Japan's economy, while downgraded its views on the U.S. and Chinese economies for the first time in 19 months and nine months respectively.

"However, slowing down of overseas economies is still downside risk of the Japanese economy," according to the report.

Considering rising demands before the consumption tax hike from 5 percent to 8 percent two weeks later, the report upgraded the assessment for industrial output and imports for the first time in eight months and three months, respectively.

"Industrial production is increasing with a last-minute rise in demand before a consumption tax increase," and "imports have been increasing recently," it said.

The government warned that "negative reaction after a last- minute rise in demand before a consumption tax increase is expected," suggesting tax hike may have some negative effects across the board.

Moreover, it also described the tensions of Crimea as a " growing geopolitical risk needed to be kept a close eye on."