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To: Tundra who wrote (56704)	10/30/1998 3:32:00 AM
From: Tundra	Read Replies (2) \| Respond to of 58727

Thread, The following is a BoJ forecast. The last point in the article has been my view all along. I believe, but am not sure, I expressed this earler on this thread. I know I have elsewhere. Japan cannot recover until the bank bad loans problems are resolved and the bad loans and assets secured thereby are disposed in good part . This overhanging potential asset dump will likely act as a barrier to individual purchases of RE. What happens to their property value after the asset dump? Not a good thing, I believe. The Japanese are having problems encouraging consumption for a variety of reasons. One relatively unemphasized point is the aging of the Japan society. One needs youth to spur real consumption. Alot of other resons exist, of course. FRIDAY OCTOBER 16 1998 News RECESSION: BoJ issues warning over economy By Paul Abrahams in Tokyo <Picture: boj>The Bank of Japan warned yesterday that the world's second largest economy was continuing to deteriorate, a view confirmed by a wide range of newly published data. The Reuters news agency issued a survey of 30 economists which showed they believed on average that the economy would contract 1.6 per cent in the financial year ending March 31. That compared with a 0.1 per cent contraction predicted in an earlier survey in July. The consensus was the economy would expand just 0.1 per cent next year. The BoJ said there was no sign of personal consumption recovering despite Y4,000bn (£20bn) of one-off cuts in income tax. Consumer confidence has been hit by record levels of unemployment, corporate bankruptcies and falling household income. The forecast from the Reuters poll was that the unemployment rate would rise to 4.9 per cent next financial year, above those of the UK and the US. Weak consumer confidence would prevent domestic vehicle sales this year beating 1997 levels of 6.27m units, said the Japan Automobile Manufacturers' Association. Poor demand from the automotive and construction sectors had further knock on effects, with crude steel production in September down 8.8 per cent year on year, according to the Japan Iron and Steel Federation. The lack of final demand was leading to expanding inventories and cut-backs in production and capital investment, according to the ministry of international trade and industry. Yesterday it revised down its assessment of industrial output for August, from minus 8.5 per cent to minus 9.1 per cent. The capacity utilisation ratio fell 9.7 per cent, partly explaining poor capital expenditure figures. Lacklustre domestic demand was behind a 43 per cent jump in August's current account surplus to Y1,157bn. Imports dropped 5.5 per cent year on year to Y2,752bn. Exports rose just 0.7 per cent to Y3,842bn because of the collapse of Asian demand. The trade surplus jumped 78 per cent to Y546bn. The BoJ warned that recovery was unlikely to take place until the financial system was stabilised.