Japan's Weak Economy Hits Home ; Prime Minister Junichiro Koizumi Hopes a Free-Trade Pact with Singapore Will Pull His Country out of Recession

Article excerpt

When the glass pot on Yuko Ohira's electric coffee maker cracked during dishwashing the other day, she found an old steel pan to take its place.

Until just a few months ago she would have immediately ordered the 5,500-yen (US$45) replacement pot without much thought.

But with the New Year's economic indicators threatening to make Japan's sagging economy even worse, getting used to an ugly makeshift coffeepot is one of the small lifestyle changes that are becoming more common for this middle-class household of nine.

Newsstands are filled with magazines predicting massive layoffs and corporate failures this year. Even the greetings in New Year's cards contained prayers for the strength to persevere instead of the customary optimism about the future.

The sputtering end to years of Japanese expansion and the government's inability to turn things around is hitting Japanese families such as the Ohiras, core supporters of Prime Minister Junichiro Koizumi and his plans to restructure the country's economy.

Mr. Koizumi's eight-month-old government promises to curtail the bureaucracy, strengthen Japan's social safety net, and foster new industry. But because many bureaucrats and rival politicians are against Koizumi's plans, a dip in his 70-percent-plus approval rating could be fatal.

Indeed, money is tighter than ever at the Ohira house because the family-run contracting business, which thrived for decades here near the center of Japan's ancient capital, is drying up. The mainstay business of building and remodeling homes is faltering, so they have started importing building materials and are paring expenses from their three-person staff.

Still, the Ohiras say the cost of educating three kids and caring for two grandparents in their 80s is rising as the government tries to trim its own budget.

"Things have never been so tough,'' says Hiroshi Ohira, sitting in the kitchen of the family home, a structure dating back a century, one that's seen Japan's wartime destruction and decades of postwar growth.

To cope with the slow economy, the family shelved plans to expand their business and refurbish the home where Mr. Ohira and his two brothers grew up. Instead, they've boarded up half the house to cut heating and maintenance expenses. The TV remote is bandaged with masking tape instead of being replaced.

The cutbacks might not seem like much during a global recession and at a time when images of Afghan refugees appear on most Japanese TV news shows.

While laborers, dropouts, and others on the fringes of Japanese society have been squeezed for years, the sacrifices of the Ohiras show the country's doldrums are hitting working families too.

"Things are getting bad for the majority of people for the first time," said Shigenori Okazaki, an analyst at UBS Warburg, a financial services firm. …