The chairman of the Sony Corporation, Norio Ohga, has warned that the Japanese economy is close to collapse and could trigger a world recession.

Mr Ohga told a news conference the economy is facing its most difficult time ever and could enter a long spiral of deflation.

"The Japanese economy is on the verge of collapsing." he said.

He blamed Japanese politicians because they were mainly interested in thinking domestically rather than globally.

"Their only interest is in what has happened in their constituencies.

"When we point this out to them they can hardly understand what we are talking about." he said.

The influential businessman even went as far as comparing Prime Minister Ryutaro Hashimoto to Herbert Hoover, US president at the time of the 1929 Great Depression.

He said: ""Hoover triggered worldwide recession. I just hope remarks by Prime Minister Hashimoto won't trigger a worldwide recession."

Mr Ohga's comments came as share prices in Japan had shown their biggest one-day fall so far this year.

The fall followed the Tankan survey, by the Central Bank of Japan, showing that major companies were continuing to lose confidence in the country's economy.

Problems mounting

The BBC's Business Correspondent says the Japanese economy has stagnated through most of the 1990s and even now there is no real evidence that a recovery might be on the way.

The problem that Japanese business faces is extremely weak demand at home for its goods.

The government has announced a succession of government spending packages intended to provide a boost. The most recent, which was the largest, had a better reception than the others. But the business confidence survey results underline the widespread view that even that package was not enough to stimulate consumer demand.

The gloomy outlook, underlined by the Sony Chairman, suggests that Japan is most unlikely to provide the driving force for economic recovery in the other crisis afflicted economies of East Asia.

If the situation in Japan really does get worse and go into a downward spiral, there is a real risk that rest of the world would be very badly affected indeed.
 

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