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TOKYO, May 16 (Reuters) - Japan's government is considering revising down its economic assessment in a report due next week as an intensifying Sino-U.S. trade war takes a toll on exports and factory output, a government source with direct knowledge of the matter told Reuters on Thursday.
A downgrade in the crucial monthly report could fuel speculation that Prime Minister Shinzo Abe may delay once again a planned sales tax increase set for October.
In its report in April, the government said Japan's economy was recovering gradually, despite signs of weakness in exports and output.
Investors are closely watching whether the government will cut its economic outlook and if the word "recovery" remains in the report for May. (Reporting by Yoshifumi Takemoto Writing by Tetsushi Kajimoto; Editing by Jacqueline Wong)