Clinton -- doomed & wagging, Japan collapses, Y2K bug, etc Message Board

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Politics : Clinton -- doomed & wagging, Japan collapses, Y2K bug, etc

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To: alan w who wrote (552)	10/6/1998 9:31:00 AM
From: SOROS	of 1151

Wall Street Journal - 10/06/98 An INTERACTIVE JOURNAL News Roundup Sharp declines in spending on new homes and factories forced the Japanese government to reverse an earlier forecast and predict that the country's economy would contract for a second straight year. The revision comes as Tokyo struggles to meet international demands that it do more to resuscitate its recession-hit economy and ease the Asian financial crisis. Also Tuesday, Prime Minister Keizo Obuchi ordered his cabinet to look into measures -- which may include new income-tax cuts -- to supplement an earlier $126 billion economic stimulus package, according to a government spokesman. The premier wants Parliament to pass a $52 billion tax cut and approve $74 billion in new public spending by the end of this year, the spokesman said. "The world economy is facing a crisis that can't be ignored," Mr. Obuchi said Tuesday in Parliament, where lawmakers debated bills to clean up Japan's troubled banking system. "Reviving the economy is our biggest task," the prime minister said. Japan's Economic Planning Agency said it now believes the world's second-largest economy will shrink by 1.8% this year, revising a previous forecast of 1.9% growth. The contraction would mark the first time the economy has declined two years in a row since 1955, when the government started calculating the gross domestic product -- the sum of all goods and services produced within the country. The rate of contraction also would be much steeper than last year's drop of 0.7%, suggesting Japan's economic slide may only be gathering speed. The government's report offered little optimism that Japan's economy would return to growth in the near future. The agency said some of the factors that are impeding growth include: Faltering domestic demand for new goods and services, which is expected to drop by 2.4% in the fiscal year ending March 1999. A decline in demand for new housing. Spending on new housing is seen tumbling 11.6%, compared with the previous estimate of a 4.9% increase. Less investment by businesses in new factories and equipment. Such spending is down 10.1% this year to its lowest level in five years. The Economic Planning Agency also predicted that the shrinking economy will cause more bankruptcies and corporate belt-tightening, driving the unemployment rate to 4.2% for the year, up from 3.3% last year. The 4.2% rate would be the highest on record. The revision also showed that the slowdown in spending threatens to push the economy into a deflationary spiral -- where the bottom falls out on wages and prices. The agency said it expects wholesale prices to slide 1.7% this year. The one bright spot was exports, the agency said. Overseas demand for Japanese products is expected to rise 0.6%, driving up the country's current account surplus -- the broadest measure of trade -- to $122 billion from an earlier forecast of $92 billion.

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