Meet the new Junichiro, same as the old Junichiro, -g-:
Japan's Koizumi Says He'll Clean Bad Debts, Stop Price Declines
12/31 19:02
By Yoshiko Matsushita
Tokyo, Jan. 1 (Bloomberg) -- Japanese Prime Minister Junichiro Koizumi said he will continue to speed up bad-debt write- offs at banks and fight four years of price declines to revitalize the world's second largest economy this year.
''To revive the economy and establish a more confident Japanese society, I will continue to push ahead with reforms this year,'' Koizumi said in his New Year's remarks. ''I'll speed up bad-debt disposal and try to suppress deflation.''
The comments aren't new to investors who have lost confidence in Koizumi's economic policies since he took office in April, 2001. In 2002, the Nikkei 225 Stock Average fell almost 19 percent to its lowest reading since March 1983. Economic growth is seen slowing to 0.6 percent in the year starting April 1 from 0.9 percent this fiscal year, the government forecast last month.
''We know there is so little he can do'' to boost the economy, said Shigemi Nonaka, chairman of Polestar Investment Management Co., which manages 4.5 billion yen ($38 million). ''Whatever the Koizumi-led government has done so far, it doesn't seem like it's done anything good to the economy.''
Koizumi reiterated Japan must bear ''tough'' economic conditions for the time being as the government presses ahead with reforms, saying it's the only way to revive the economy.
''I believe reforms are the only way to pull out Japan's potential power,'' he said. ''Japan's potential power is big.''
The country's banking regulator, the Financial Services Agency, estimates Japan's bad loans totaled 52.4 trillion yen as of March 31, 2002. Japanese banks, which some analysts say are burdened with three times more in actual dud loans, are reluctant to make fresh loans, squeezing the economy of new credit it needs to grow.
Activity Index
Meanwhile, four years of falling prices have squeezed profits and made it harder for companies to repay debt and invest money in new factories and equipment. Japanese consumer prices, excluding fresh food, haven't risen from a year-ago levels since April 1998. In December, Tokyo core prices fell 0.7 percent from a year ago.
Analysts say Japan's economy may tip into a fourth recession in a decade by early this year. The all-industry activity index, used as a proxy for gross domestic product, fell 0.3 percent in October, a government report showed last month, suggesting that the economy may have contracted in the fourth quarter after a 0.8 percent gain in the third quarter. |
