(OT)
NYTimes, September 16, 1998
Experts Say Some Asian Countries Are in Depression
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One of the biggest disappointments has been Japan, which has the world's second-largest economy,
more than twice the size of the rest of Asia affected by the crisis. A year ago, Asian leaders
journeyed to Tokyo to try to persuade officials to revive the Japanese economy so that it could
become a locomotive for growth throughout the region.
That has not happened. Japan is now in a recession, the worst since the end of World War II, and
economists project a decline of more than 1 percent for this year, with little improvement in sight.
Last week, the government said growth declined by an annual rate of 3.3 percent for the April-June
quarter.
As the economy contracts, Japan's Parliament is squabbling over how to save the banking system,
and corporate earnings are taking their deepest plunge in years.
Last week, Japan's Economic Planning Agency released a report characterizing the state of the
Japanese economy as "extremely severe," a notch worse than its August assessment of "very
severe." Taichi Sakaiya, head of the agency, added that the global economy was "at the threshold of
an extremely difficult phase."
The problem is that both Japan and the rest of Asia are suffering from spreading deflation, which is
delivering a double whammy. Prices are tumbling in the everyday world of bread and butter as well
as in the financial world of stocks and bonds. In this deflationary environment -- one in which
revenues, prices and production are falling in response to a collapse in demand -- Japanese
companies are trimming imports and investment. And as they curb their investments, the effects are
felt acutely throughout the region.
All this while Japanese banks, unable to clean up their bad debts, are pulling back on all types of
lending and cutting off access to funds for many companies elsewhere in Asia. Despite the ostensibly
low interest rates in Japan, many companies have little access to funds and are being forced to look
abroad to raise money.
So perhaps it is no surprise that Orix Corp., Japan's largest leasing and diversified financing
company, is planning to list American depository receipts on the New York Stock Exchange this
week. Orix will become the second Japanese financial corporation to gain access to the New York
market -- the Bank of Tokyo-Mitsubishi is currently listed -- but it is too soon to tell whether this
move will help the company. The results will be closely watched by other financial institutions that
have long desired but never dared to tap the stock market in the United States.
Yoshihiko Miyauchi, president of Orix, says the listing will probably be useful because the Japanese
economy has been so weak for so much of the 1990s that it is hard to predict when it will finally
begin to improve.
The Japanese economy is "at the edge of a cliff, standing there already for some years," Miyauchi
said. "We're lucky we haven't fallen yet."
nytimes.com |
