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Strategies & Market Trends : JAPAN-Nikkei-Time to go back up? -- Ignore unavailable to you. Want to Upgrade?

To: Ramsey Su who wrote (1639)	12/5/1998 3:44:00 PM
From: chirodoc	Respond to of 3902

JAPAN: Gloom as GDP falls again By Michiyo Nakamoto in Tokyo Japan's gross domestic product fell in the July-September period, in an unprecedented fourth consecutive quarterly decline, highlighting the dire state of the economy. GDP shrank 0.7 per cent from the previous quarter for an annualised 2.6 per cent decline. The fall follows drops of 0.7 per cent in the previous quarter, 1.3 per cent in the January-March period, and 0.4 per cent in the October- December quarter last year. Taiichi Sakaiya, chief of the Economic Planning Agency, indicated it would be difficult for Japan to hold off an even bigger decline in GDP than the government forecast of 1.8 per cent this year. An increase in public-sector investment failed to offset a sharp 4.6 per cent drop in private capital spending and a 6.2 per cent fall in private housing investment. The latest figures make this the longest uninterrupted fall in GDP since the government began collecting data by the present method in 1955. "These are pretty nasty numbers," commented Robert Feldman, chief economist at Morgan Stanley in Tokyo. While the decline in GDP was as expected, the sharp drop in private-sector investment was of significant concern, since private consumption was also likely to weaken, he said. Income for heads of household fell a real 0.8 per cent in October year-on-year, while household spending was also down last month by 1 per cent from a year earlier. Kiichi Miyazawa, finance minister, noted that a planned freeze of the fiscal austerity law, designed to free the state budget of debt- financing bonds by 2005, could be maintained after 2000, by which time Keizo Obuchi, the prime minister, aims to have put the economy back on the road to recovery. Analysts said the government's strategy for restoring growth failed to address the underlying problems of excess capacity and structural inefficiencies. "There is a socialist philosophy behind the way they are continuing to react to the problem. We've got the anaesthesia without the operation," Mr Feldman said. A growing concern is the rising level of public-sector debt as a result of the government's fiscal stimulus measures. This fiscal year, Japan's public-sector debt will exceed gross domestic product for the first time ever, the finance ministry said. Public-sector debt is expected to rise to ¥560,000bn (£2,749bn), or 13 per cent more than the forecast GDP of ¥495,000bn. The government's budget deficit is expected to be 9.8 per cent of GDP, significantly higher than the average of 3 per cent among other industrialised countries and worse than Brazil's 7.3 per cent. This is largely due to a series of bond issues made to finance two large economic stimulus packages