TOKYO, April 17 (Reuters) - Japan's government raised its assessment on the economic outlook in a monthly report, saying the pace of deterioration is likely to slow on the back of progress in inventory adjustment.
Citing signs of an easing in fall in Japan's exports and production, the government also scaled back its pessimism on exports, while keeping its overall economic view unchanged for a second month.
"While the economy is likely to continue worsening for the time being, the tempo of worsening is expected to moderate as inventory adjustment progresses," the report said.
Both exports and industrial production have been plunging at an unprecedent pace in the past few months due to the global slump but economists say they are likely to stop falling some time in the coming months.
The government said exports are falling substantially, a slight upgrade from its assessment last month that they are falling very substantially.
The change, although subtle, represents its first upward revision in assments on the economy in more than a year.
"If inventory adjustment progresses, the impact would not be negligible," said a senior official at the Cabinet Office.
The government also said a 15.4 trillion yen ($155 billion) stimulus package Prime Minister Taro Aso unveiled last week will help support the economy.
Still, the government also said the current extremely low level of production activity poses a threat to employment and there are also downside risks to the world's economy.
The government also downgraded its assessment of corporate sentiment after the Bank of Japan's tankan corporate survey released on April 1 showed sentiment among big Japanese manufacturers at a record low. ($1=99.37 Yen) (Reporting by Hideyuki Sano; Editing by Michael Watson)