Magazine article Business Asia

Is Japan Back on Track?

Magazine article Business Asia

Is Japan Back on Track?

Article excerpt

Strong yen a concern

"See, it's working." That's what Prime Minister Mr Keizo Obuchi has been saying as he seeks to persuade world leaders that his, efforts are getting Japan's economy back on track.

Mr Obuchi was armed with some impressive -- if less than completely persuasive -- growth data when he attended the recent Group of Eight summit of the world's seven richest nations and Russia in Germany.

Controversial new figures show that Japan's long-suffering economy registered growth in real gross domestic product (GDP) of 1.9 per cent for the first quarter of 1999 compared with the previous quarter, or 7.9 per cent on an annual basis. The January-March figure was the first positive GDP growth number since the July-September quarter of 1997, and a quantum jump above the consensus forecast of growth of just 0.2 per cent.

So has Japan turned the comer?

Japanese officials themselves are mostly cautious about drawing too-optimistic conclusions from the first-quarter data, saying the economy has stopped falling but not necessarily begun to recover. Indeed, Japan fears premature positive forecasts will strengthen the value of the yen and harm the nation's export drive.

Cynics suggest that Japan's apparent recovery is due only to a massive public works program, rather than an all-important increase in public consumption.

Even the Obuchi Government is wary of imposing too many stimulus packages on the embattled economy. Mr Obuchi is seeking more cost-effective means of boosting the economy, choosing for now to shun its pork-barrel tendencies of yore. …

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