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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: MGV who wrote (7867)	9/11/1998 2:35:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Here's another big issue that I think still pertains to Brazil and TBR that no one seems to be talking about today. I guess the dollars fall against the yen has taken all the pressure off? Is all of Asia built into Brazil? sf ======================== Japan's GDP Continues to Shrink On Poor Consumer Confidence Dow Jones Newswires TOKYO -- Battered by declining consumer spending at home and a worsening financial crisis abroad, Japan's economy shrank for a third-straight quarter, the Economic Planning Agency said after the Tokyo stock market closed Friday. Separately, a monthly report by Japan's central bank released earlier in the day said the implementation of special income tax cuts this summer failed to boost consumer spending. It added that consumers remain gloomy about the prospects for the future. Japan's economy is still struggling to shake off the effects of a plunge in land prices in the early 1990s, which buried the country's banks under a mountain of failed or risky loans. Japan's gross domestic product, the measure of all goods and services produced in the country, declined by a greater-than-expected 0.8% between April and June from the previous quarter, the planning agency said. Tokyo-based economists surveyed by Dow Jones on average had forecast a 0.5% drop. It was the first time since 1955 that the Japanese economy had marked three consecutive quarters of decline. The figures showed the economy contracting at an annual rate of 3.3%, the planning agency said. The economy contracted by 1.3% in the January-to-March quarter. If the trend persists, this would become Japan's second-consecutive year of decline. Last year, the economy shrank 0.7%, its first annual decline since 1974. The numbers confirmed that Asia's economic powerhouse remains mired in a stubborn recession from which the EPA held out little hope for a quick recovery. "The data reflects the extremely severe economic situation," said Economic Planning Agency Chief Taichi Sakaiya. Mr. Sakaiya repeated that that the government's official forecast for 1.9% growth during the current fiscal year through March would be impossible. Edging Toward Deflationary Spiral "The Japanese economy is walking along the edge of a deflationary spiral," said Mr. Sakaiya, who added the economy is in worse shape than he previously expected. Mr. Sakaiya said that the economic stimulus package and the tax cuts imposed by the government earlier this year would support the economy. But he added that whether growth would resume depends on factors such as the global economic situation and how quickly the parliament can pass bills to stabilize the beleaguered financial system. "If the financial problem is solved, a sense of stability in the economy will emerge," Mr. Sakaiya said. He said he hopes that the economy will begin to recover within two years and that a recovery in consumer sentiment is vital for the economy to come out of its doldrums. While the GDP figures came out after the close of trading, mounting pessimism about the outlook for the economy helped drive Tokyo stocks down more than 5% Friday. As Japanese banks set aside money to cover their losses, they've cut back on new lending. The resulting cash crunch has sparked a wave of bankruptcies and forced businesses to curtail spending on research and new factories. But the biggest drag on the economy has been a sharp fall in individual consumption, economists said. The first blow came with an ill-timed increase in the national sales tax last year, just as the economy was showing signs of recovering. Then, the Asia crisis and a series of high-profile corporate failures further dampened consumer sentiment. Meanwhile, in its monthly economic report, the Bank of Japan said decline in company spending and production have cut into profits and that in turn is creating a decline in employee income. "Employment and income conditions have deteriorated further," it said. With the severe income and employment conditions, the Bank of Japan said, consumer sentiment is turning even more cautious. "Japan's economic conditions continue to deteriorate," the report said, adding that the weak consumption and demand are keeping wholesale prices on a downtrend and consumer prices below the previous year's level. The central bank also cited the additional risk factor to the economy from recent financial market volatility triggered by the political and economic crisis in Russia.