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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: sciAticA errAticA who wrote (32709)	4/30/2003 8:19:14 AM
From: sciAticA errAticA	Read Replies (1) \| Respond to of 74559

Bleak outlook for Japanese economy Wednesday, 30 April, 2003 BBC Japan's economy continues to be hit by a vicious circle of lower wages and weaker spending, according to government figures. The average monthly wage fell 2.1% in March from a year earlier, the steepest drop in 11 years, the government said on Wednesday. At the same time, official industrial output figures revealed a disappointing fall of 0.2% in March, as exports suffered. The Bank of Japan said it would ease monetary policy to try and support the weak economy as it voted to raise the level of reserves available to banks for lending. Underperforming The 2.1% fall in wages follows a drop of 1.6% in the year to March 2002. It is the sharpest fall since the Ministry of Health, Labour and Welfare started compiling the data in 1991. Economists have warned that lower incomes have already weakened consumer spending and put pressure on company earnings. "Both the basic pay and bonuses shrank, while the number of part-timers increased," said a ministry official. The gloomy picture was compounded by the unexpected fall in industrial output. "Given that people expected around a 1% gain, the (0.2% fall) figure is quite bad," said Junji Ota, an economist at Okasan Research Institute. Such pessimism also contradicts a more upbeat projection earlier this week from the leading Japanese economist Motoshige Itoh of the university of Tokyo. He told BBC News Online that Japan's economy was over the worst and set for a gradual recovery. Over-optimism? A government official blamed the fall in March output on a slowdown in car exports, particularly to the United States. But he predicted orders would increase in May as new products are launched in the auto and telecoms sectors. Analysts were more sceptical. "This is an ominous sign considering that the METI (Ministry of Economy, Trade and Industry) projections consistently overestimate actual production," said JP Morgan economist Ryo Hino. A poll conducted in mid-April by the Asahi newspaper and published on Wednesday also showed businesses had a grim outlook for the future. Of the 100 companies surveyed, 73 said they believed the economy was at a standstill. A further 20 thought it was "deteriorating gradually", while five said it was getting worse. "Hopes for an export-led recovery are fading because of persisting concern over slumping personal consumption and corporate capital investment, as well as uncertainty over the future of the US economy," said the daily newspaper. news.bbc.co.uk