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Sunday, 10 February, 2002, 14:34 GMT
Japan acts to end recession
Nikkei closing price on Friday 8 February 2002
Shares rose on Friday amid hopes of intervention.
Prime Minister Junichiro Koizumi has asked his government minister to hammer out a series of economic reforms aimed at lifting Japan out of recession.

Mr Koizumi has "ordered us to take comprehensive measures to fight deflation", said economic and fiscal policy minister Heizo Takenaka.

The measures will include a "further monetary easing and drastic plans to resolve the [country's commercial banks'] bad loans problem as quickly as possible, he said.

The government is expected to ask the banks to write off some non-performing debts owed them by Japanese companies.

But they will not be expected to go it alone.

"It is natural for the government to inject public funds if necessary," Mr Takenaka said in a national television interview.

Ailing share prices

The economic reform package will also include steps to reinvigorate the Japanese stock market which fell to an 18-year low last week, Mr Takenaka said.

Finance minister Masajuro Shiokawa
Mr Shiokawa predicts economic stagnation
On Friday, the index gained just over 1% to close at 9,686 points on hopes that this time the government's efforts would be successful.

The reforms will also put in place safety nets to help small firms, Mr Takenaka said.

Japan's economy has been in dire straits for years; unemployment has reached record levels, consumer spending has plummeted and Japanese businesses are swept by bankruptcies.

This year, economic growth is set to stagnate at 0%, Japan's finance minister, Masajuro Shiokawa told finance ministers and central bank officials at a summit of the Group of Seven (G7) industrialised countries over the weekend.

See also:

10 Feb 02 | Business
G7 upbeat on global economy
02 Feb 02 | Business
'No quick fix' for Japanese economy
20 Sep 01 | Business
Rescue plan for Japan's banks
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