Mori slated as economy slides

Mr Mori: "Extremely worried" by Japan's economic situation

Political pressure on Japan's Prime Minister Yoshiro Mori is growing, as record unemployment and plummeting share prices add to the country's economic woes.

Opposition parties are on Monday to submit a motion of no-confidence in Mr Mori, whose public support ratings have plunged following a series of political scandals and mounting economic gloom.

The condition of the economy is getting more severe

Taro Aso, economics minister

Although the motion is likely to be defeated, many MPs in Japan's ruling coalition are reportedly discussing behind-the-scenes moves to oust Mr Mori, and limit damage in July's elections to the country's upper house.

The move comes as figures released on Friday showed unemployment rising in January to its highest level since World War II, although the percentage of people without a job remained unchanged at 4.9%.

Japanese stocks plunged a further 3.3%, with the country's benchmark index, the Nikkei, closing at its lowest level since July 1985.

Consumer sentiment and thus demand also keep slumping. As a result, underlying prices on Tokyo's High Streets fell by a record 1.1% in February, compared with one year ago.

'Extremely worried'

The situation has raised fears that the economy, which last year seemed to be recovering from its worst post-war slump, is heading back into recession.

Kiichi Miyazawa: urged caution about "downside risks"

Mr Mori told a parliamentary committee he was "extremely worried" about the economic situation.

Finance minister Kiichi Miyazawa said: "We need to be cautious about downside risks."

And economic minister Taro Aso said that "the condition of the economy is getting more severe."

Help package

The government, which is considering lowering official economic forecasts, on Friday announced plans to inject yet more money into the economy in an effort to stimulate growth.

The package, to be unveiled next week, will include measures to boost the liquidity of property markets and ease the burden of bad debts on bank loan books, the government said.

The government has already spent more than 120 trillion yen attempting to revive growth during the past decade, since the bursting of an asset price bubble sent the economy into a nosedive.

Economist Tomoko Fujii, of investment bank Nikko Salomon Smith Barney, warned that the economy may already have started contracting again.

"We are in a very deep slump which can be called a recession," he said.

Commerzbank Securities economist Ron Bevacqua said that data published on Friday "complete an abysmal week of releases regarding the Japanese economy".

The government has also come under pressure following a series of political scandals.

Masakuni Murakami, a former powerbroker in Mr Mori's Liberal Democratic Party, was arrested on Thursday on suspicion of bribery.