Europe South Asia Asia Pacific Americas Middle East Africa BBC Homepage World Service Education



Front Page

World

UK

UK Politics

Business

Sci/Tech

Health

Education

Sport

Entertainment

Talking Point
On Air
Feedback
Low Graphics
Help

Thursday, January 21, 1999 Published at 09:06 GMT


Business: The Economy

A bright spot on Japan's horizon?

No let up in the pressure on Japanese jobs and wages

Japan's economic deterioration appears to be "moderating gradually", according to the country's central bank.

The Bank of Japan said any improvement was due to a rise in public sector investment. However, in its latest monthly report, it said private sector demand had yet to show signs of recovery.

Private sector capital spending is still falling sharply and housing investment, in particular, remains sluggish. Consumer spending is also weak.

The bank said the decline in industrial output had slowed somewhat, but corporate earnings had continued to deteriorate, putting more pressure on jobs and wages.

"As a result, corporate and consumer sentiment remains cautious, and a recovery in private sector demand has not yet been seen," it said.

The bank expects rises in public sector demand to continue to support the economy towards the end of the first half of the year to March 2000, but it does not expect the situation to develop into a period of sustained recovery. It expects profits and wages to continue to deteriorate.

The government has put in place a large economic stimulus package, involving tax cuts and spending on public works, to try and reverse Japan's worse postwar recession.

Monitoring the yen

The international economic environment has also been unfavourable to Japan, with the yen strengthening against the dollar by nearly 25% since the autumn, making Japan's exports less competitive.

The bank said the yen's appreciation and growing uncertainty about emerging economies, as well as financial markets in those countries, need to be monitored carefully.

"Restoring a stable financial system is important to lead the Japanese economy to steady growth," the bank said.

Although financial conditions in the private sector have improved slightly thanks to measures implemented by the government and the Bank of Japan, companies are still very cautious about raising funds towards the end of March, as banks maintain a strict lending stance towards new advances, it said.

The Bank of Japan said the rise in yields of long-term government bonds since mid-December reflected market concerns about the deterioration of supply and demand conditions.

It said the fall in share prices since then was largely due to the yen's strength and the rises in bond yields.

Although these movements have been reversed recently, it said any further developments on this front and their impact on the economy needed to be watched carefully.



Advanced options | Search tips




Back to top | BBC News Home | BBC Homepage | ©


The Economy Contents


Relevant Stories

19 Jan 99 | The Economy
Japan in 'economic crisis'





Internet Links


Bank of Japan


The BBC is not responsible for the content of external internet sites.




In this section

Inquiry into energy provider loyalty

Brown considers IMF job

Chinese imports boost US trade gap

No longer Liffe as we know it

The growing threat of internet fraud

House passes US budget

Online share dealing triples

Rate fears as sales soar

Brown's bulging war-chest

Oil reaches nine-year high

UK unemployment falls again

Trade talks deadlocked

US inflation still subdued

Insolvent firms to get breathing space

Bank considered bigger rate rise

UK pay rising 'too fast'

Utilities face tough regulation

CBI's new chief named

US stocks hit highs after rate rise

US Fed raises rates

UK inflation creeps up

Row over the national shopping basket

Military airspace to be cut

TUC warns against following US

World growth accelerates

Union merger put in doubt

Japan's tentative economic recovery

EU fraud costs millions

CBI choice 'could wreck industrial relations'

WTO hails China deal

US business eyes Chinese market

Red tape task force

Websites and widgets

Guru predicts web surge

Malaysia's economy: The Sinatra Principle

Shell secures Iranian oil deal

Irish boom draws the Welsh

China deal to boost economy

US dream scenario continues

Japan's billion dollar spending spree