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To: long-gone who wrote (15908)	8/14/1998 4:11:00 PM
From: Alex	Read Replies (1) \| Respond to of 116764

Japan's economy to worsen before recovering--EPA TOKYO, Aug 14 (Reuters) - The Japanese economy is likely to worsen further before it stages a recovery, Economic Planning Agency Minister Taichi Sakaiya said on Friday. Sakaiya told a programme being recorded for airing by NHK public television that he believed the economy would recover in less than two years, referring to a turnaround time frame forecast by the cabinet. He added that he believes the economy will worsen further before staging a recovery. He also said unless the government is willing to accept this reality, the present economic slump may be prolonged. ''If we ready ourselves for this (further worsening), the economy will get better, but if we try to keep it from worsening, (the slump) may become longer than expected.'' ''It's like a surgical operation. There is bleeding and pain afterwards, but unless it is done, you will not get better,'' Sakaiya said. He also said current economic conditions were ''very bad,'' adding that there was a danger that the economy could enter a deflationary spiral although it was not in one at the moment. ''There are problems with the financial sector and sentiment is very bad. I would say there is a danger of entering a deflationary spiral,'' he said. Sakaiya said he believed economic growth for the fiscal year to March 31 would be around zero percent. He also said the view that tax cuts promised by Prime Minister Keizo Obuchi will be followed by tax increases in the future was mistaken. ''It's wrong to think that the tax cuts, which will be financed by deficit-financing bonds, will lead to a future tax rise,'' he said. Regarding recent falls in the yen and Japanese stock prices, Sakaiya said it was due to concerns over the Japanese economy rather than concerns about the Obuchi cabinet. biz.yahoo.com