South China Morning Post - Hong Kong - 10/02/98
AGENCIES in Tokyo
Japan's economy is in hard times with business confidence at its worst level for four years, its banking crisis deepening and the
stock market taking a pounding.
Further gloomy readings in the Bank of Japan's quarterly tankan survey, coming on the eve of important global finance meetings,
were sure to raise the heat on the Japanese Government to act fast to pull the world's second-biggest economy out of its worst
recession since 1945.
The survey found sentiment among big manufacturing companies slid more than expected in September from June to minus 51, its
lowest level since March 1994.
The news provided a grim send-off for Finance Minister Kiichi Miyazawa as he leaves today for meetings in Washington with the
Group of Seven, the International Monetary Fund and the World Bank.
The Nikkei-225 Index fell to a new 12-year low, closing off 1.56 per cent at 13,197.12.
"I think these are very, very gloomy data, as have other recent data been," said Robert Feldman, chief economist for Japan at
Morgan Stanley.
"They will probably cause further downward revisions of profit expectations and business investment expectations and pressure on
the government for more fiscal action."
Companies overall said they plan to cut capital spending by 8.7 per cent this business year on top of a 3 per cent reduction last
year.
"The ball is clearly in the court of the politicians and the bureaucrats to restructure and try to generate the basis for growth down the
road," said Andrew Shipley, economist at Schroders Japan.
"They are already talking about another supplementary budget, more talk about tax cuts, public works spending," Mr Shipley said.
"Unfortunately, these approaches haven't worked in the past. Clearly they are going to shift into a hyper-accommodative fiscal
stance, but this is not what the economy needs." |
