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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (75294)	2/6/2000 8:40:00 AM
From: Les H	Read Replies (1) \| Respond to of 132070

Japan's Economy Probably Shrank Last Quarter, Head of Planning Agency Says By Jim Bonner and Neha Kumar (Adds second section with background on government spending plans) Tokyo, Feb. 6 (Bloomberg) -- Japan's economy probably shrank last quarter as companies and consumers spent less, said Taichi Sakaiya, head of the Economic Planning Agency. ``October-December growth will be on the minus side because of sluggish consumer spending, which was affected by a drop in winter bonus payments,' he said in an interview on the ``Sunday Project' program on Asahi TV. The EPA, which compiles the gross domestic product figures, hasn't set a date to release the data from last quarter. Even so, Sakaiya's signal the world's No. 2 economy sunk back into recession after expanding in the first half of last year. The remarks contradict those Sakaiya made Jan. 20 when he said the economy probably grew in the fourth quarter last year amid increasing industrial production. They also come amid signs the government will abandon earlier commitments to rein in state spending, preferring growth to cutting the budget deficit. Japan's economy shrank 1 percent in the July to September quarter after growing one percent in the previous quarter and 1.5 percent between January and March. Prior to that, GDP shrank for five quarters. Government Spigot Prime Minister Keizo Obuchi, who must call national elections this year, has begun laying the groundwork for an increase in government spending. Since taking office in the summer of 1998, Obuchi has overseen passage of a series of economic-stimulus measures, including two spending packages worth a total 42 trillion yen, while setting aside indefinitely a deficit-reduction law. The spending spree helped end five consecutive quarters of recession. When government spending waned in the third quarter last year, the economy contracted again as consumer spending and capital investment weren't strong enough to keep GDP expanding without help from the state purse. Obuchi submitted to parliament last month a record 85 trillion yen ($802 billion) budget for the year starting April 1. The budget will create a deficit equal to 9.4 percent of GDP. Finance Minister Kiichi Miyazawa had said the budget would be Japan's last attempt to spur growth as he expected the economy to turn around by summer. Since, the current session of Japan's parliament began on Jan. 28, though, Miyazawa has changed tack. ``During the next fiscal year, we will focus on reviving the economy,' Miyazawa said on Feb. 4. ``We can't confirm such a recovery until the improvement of the economy becomes cyclical. Then, we can draft a neutral budget.'