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To: Alex who wrote (19347)	9/20/1998 1:08:00 PM
From: goldsnow	Respond to of 116764

U.S., Europe GDP to grow despite Asia, Japan-IfW 11:55 a.m. Sep 20, 1998 Eastern KIEL, Germany (Reuters) - A leading German economic institute said over the weekend that it expected solid growth to continue in Western Europe and the United States, despite world economic turmoil and recession in Japan. Economic output in the world's major industrial nations should grow 2 percent this year even as Asia and Russia struggle with their financial crises and Japan's gross domestic product declines, the Institut fuer Weltwirtschaft forecast said in a report released Saturday. Forecasting U.S. GDP growth of possibly 3.2 percent this year, the IfW said economic expansion in the United States would only be slowed for a short time by the crises and Japan. It also forecast strong U.S. growth in 1999, although the rate would slip to 2 percent as a result of the high basis of comparison for 1998. In 1997, U.S. GDP grew 2.7 percent. Western Europe should also continue to advance. ''In contrast to in the past year, the expansion has been carried by domestic demand,'' IfW said. The institute forecast Western European economic growth of 2.8 percent in 1998 and 2.5 percent in 1999, with Germany, the world's third-largest economy, providing much of the impetus. IfW said German GDP would rise 2.7 percent this year on 2.4 percent next year despite concerns from other regions. ''The current economic signs are more important than the impact of the Asian and Russian crises as well as the turbulence in the stock markets,'' IfW said. The group forecast west German growth of 2.9 percent this year and 2.3 percent in 1999. In the formerly Communist East Germany, the economy should expand 1.5 percent this year and 2.5 percent in 1999, the group predicted. The expansion would be supported by a decline in German unemployment. IfW forecast the average number of Germans out of work would fall slightly to 4.3 million this year, and then decline to 3.99 million in 1999. Regarding Japan, the world's second-largest economy, IfW forecast GDP would decline 2.1 percent this year, but would recover in 1999, saying growth of 1.2 percent was possible. Copyright 1998 Reuters Limited.

To: Alex who wrote (19347)	9/20/1998 1:09:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116764

Japan bank deal may not boost Obuchi at U.S. summit 02:03 a.m. Sep 19, 1998 Eastern By Elaine Lies TOKYO, Sept 19 (Reuters) - Japanese Prime Minister Keizo Obuchi flies on Sunday to meet U.S. President Bill Clinton with a hard-won agreement on fixing the nation's ailing banking sector under his belt. But while the deal was touted by the government as a victory for Obuchi to take to his maiden U.S. summit, the mauling he and his Liberal Democratic Party (LDP) suffered in their struggle with the opposition to agree on the plan may well make the win a hollow one. ''The unfortunate thing about this plan is that controversy raged until the very end,'' said an editorial in the leading daily Mainichi Shimbun on Saturday, the day after the deal was clinched. Noting that the Obuchi government, which proclaimed itself the ''Economic Recovery Cabinet'' when it assumed power in July, dearly wanted something in hand to take to the Clinton meeting on Tuesday, the paper added: ''The only thing that can be seen clearly at this point is the LDP's retreat.'' ''By no means can you say the problem has been completely dealt with,'' it warned. The plan announced late on Friday showed the ruling party had made countless concessions from its original plan, which called for the use of public funds to bolster big banks whose failure, authorities argued, would seriously jolt Japan's financial system. The deal came after weeks of gruelling talks by party officials seeking to narrow the gap between the opposition's tough approach to the banking cleanup and the ruling party's original plan that included using taxpayers' money to smooth mergers of banks deemed too big to fail. Obuchi said his decision to accept many of the opposition demands was based on ''my strong determination that no matter what, Japan must not cause a financial recession'' in other countries. Obuchi also said he believed Clinton would respond favourably to the agreement. ''The U.S. president will surely show understanding towards my decision,'' he said. Analysts say that Obuchi desperately needs to show that he can do business with Clinton, particularly in the area of revitalising the nation's economy, expected to be the major focus of their talks. In what may be an attempt to downplay expectations for the summit, Japan says its main goal is simply to give the two world leaders, who between them control a hefty chunk of the world economy, a chance to meet. ''Since this is the first time the two have ever met, we just want to make it all as comfortable as possible,'' a Foreign Ministry spokesman said Friday. That may be difficult, given the circumstances under which the two will meet. Obuchi is hobbled by steadily worsening popularity ratings, while Clinton is faced with a struggle to save his presidency as a result of a sex scandal. A U.S. House of Representatives panel will release on Monday Clinton's videotaped testimony on his relationship with former White House intern Monica Lewinsky. Although U.S. officials have repeatedly insisted the scandal will have no impact on U.S.-Japan diplomacy, the Mainichi Shimbun said it is highly likely to cast a pall over the proceedings. ''In this time of economic hazards around the world, it is unfortunate for both these leaders, who should be bulwarks against such dangers, to have their leadership at home so shadowed,'' it added. ''Markets will be watching keenly for any flaw in their discussions,'' it said. ((Tokyo newsroom +813-3432-8018 tokyo.newsroom+reuters.com)) Copyright 1998 Reuters Limited.