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EDITIONS
Friday, 13 April, 2001, 05:18 GMT 06:18 UK
Gloom as Japan's economy weakens
Share prices at Tokyo brokerage
The US slowdown is hitting Japan's economy
The Bank of Japan has voted to leave its monetary policy unchanged amid a gloomy government report that the economy is weakening.

The bank's decision had been widely expected after it returned to a zero interest rate policy last month.

Correspondents say the bank is perceived as having done all it can to try to turn around the ailing Japanese economy.

Ryutaro Hashimoto: A favourite in the LDP leadership race
Ryutaro Hashimoto: A favourite in the LDP leadership race

The bank pledged to provide further ample liquidity if there were risks of instability in the financial market.

Economics Minister Taro Aso said a slide back into recession was a real possibility.

"If the economy worsens rapidly due to US economic conditions, and there are signs it could contract, we should not hesitate to carry out an extra budget," said Mr Aso, quoted by Reuters news agency.

LDP leadership race

He is one of four MPs running for leadership of the ruling Liberal Democratic Party (LDP).

Former Prime Minister Ryutaro Hashimoto is a frontrunner in the race to succeed the unpopular incumbent, Yoshiro Mori.

The government used the word "weakening" on Friday for the first time since September 1995 to describe Japan's ailing economy.

The monthly report downgraded the assessment of several key sectors, including jobs, housing, profits and business sentiment.

"The economy is weakening, reflecting the slowdown of the US economy," it said.

"Japanese exports have faltered, resulting in a decline in production."

In February, export growth slowed to just 1.3% from a year earlier, while imports were up 11.5%.

The government and ruling parties last week announced a package of steps aimed at helping banks to clean up an estimated 32 trillion yen ($258.8bn) in bad loans and to reduce their vulnerability to stock market swings.

See also:

06 Apr 01 | Business
19 Mar 01 | Business
16 Mar 01 | Business
22 Mar 01 | Business
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