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: DD™ who wrote (559)	10/6/1998 2:54:00 PM
From: SOROS	of 1151

Asahi - Tokyo - 10/6/98 By AMY SHIRATORI The nation's economy is expected to contract 1.8 percent this fiscal year, posting the largest ever year-to-year drop in the gross domestic product, the Economic Planning Agency said this morning. The prediction, endorsed by the Cabinet, is in sharp contrast to the government's earlier forecast that the economy would expand by 1.9 percent. That expectation was based on the assumption that domestic demand would recover from last year's government deflationary policies. EPA officials said the revision for the current fiscal year ending in March 1999 reflects deteriorating consumer and corporate spending, shrinking exports to Asia and slower growth in the United States and Europe. The revision in the official growth estimate is the first for the government since 1982. Economists said the revision has serious implications because many pension funds are operating on the assumption that there would be economic expansion. An economic contraction forces funds to miss their own expected targets and worsen the nation's debt problems. "The government might revise the growth forecast again after it evaluates the effects of the government's 16.65-trillion-yen stimulus package announced in April," an EPA official said. The government is currently considering the details of the package. The official said the revision is based on the assumption that no more major financial institutions will collapse, the global financial markets will not destabilize and the yen will remain at its current two-month average of 142 yen to the dollar. The forecast suggests Japan will see its second straight year of economic contraction--the first two-year contraction in the postwar period--following minus 0.7 percent growth in fiscal 1997. The agency said weak domestic demand contributes minus 2.4 percentage points to the projected 1.8 percent contraction, including minus 0.5 point from a slowdown in consumer spending, minus 0.5 point from fewer housing investments and minus 1.8 points for slower corporate capital spending. External demand adds 0.6 percent to the figure, while government outlays contribute 0.6 point. The agency forecasts personal consumption will slide an inflation-adjusted 0.9 percent instead of the initially projected 2.5 percent gain. Corporate capital spending will likely shrink an inflation-adjusted 10.1 percent--the biggest fall since fiscal 1993 when it fell 10.4 percent. Production at mines and factories are expected to tumble 7.3 percent instead of the initially projected 1.8 percent rise. The EPA forecast of exports of goods and services is expected to fall 1.9 percent in real terms instead of the initially projected 6.9 percent rise and imports will slide 7.7 percent in real terms instead of the initially projected 8.0 percent increase. The surplus in goods and services trade will be 16.6 trillion yen, up from the initially projected 12.4 trillion yen, the agency said.

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