Japan prepares for poor GDP

Asakawa allegedly fiddled with the government's hotel bills

Thursday's arrest of a Japanese diplomat on suspicion of conspiring with a hotel manager in Osaka to overcharge the government for accommodation grabbed Japan watchers' attention.

Junichiro Koizumi's government is expected to inject more cash into the economy

But Japanese foreign ministry official Akio Asakawa's alleged fraud will soon be at the back of the government's mind.

On Friday, Prime Minister Prime Minister Junichiro Koizumi is expected to announce a new cash injection into the country's beleaguered economy in a separate - and rather more deliberate - move to take the attention away from the next batch of bad news.

Japan's latest gross domestic product (GDP) figures are expected to indicate that the economy is still slowing.

Mr Koizumi's budget boost is expected to be aimed at job creation, in response to last month's rise in unemployment to more than 5%, a record high for the country.

Recession fears

Financial market officials predict that Japan's GDP fell 0.9% during the second quarter of 2001.

Some news reports in Japan were more pessimistic, predicting a 1.2% fall in output.

Either way, recession fears are vivid: Technically a country is only in recession when it has suffered negative growth for two quarters in a row.

And given the current economic difficulties suffered by the Japanese people, it is widely predicted that growth will also be negative during the third quarter, from July to September.

Japan's economic crisis is taken seriously internationally, with the credit rating agency Moody's Investors Service on Thursday announcing it is considering downgrading Japan's debt.

"I don't understand why they decided to do this now," finance minister Masajuro Shiokawa said on Thursday.