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Last Updated: Thursday, 15 May, 2003, 09:19 GMT 10:19 UK
Japan mulls stock support plan
Japanese people
Gloom sets in over the economy
The trillions of yen squirreled away in Japan's postal savings system should be used to help prop up the stock market, a government panel believes.

Japan's economy remains in the doldrums after 10 years of deflation, despite figures released on Friday indicating that bankruptcies are slowing.

The panel of economic advisers now says the postal savings system, long a haven for Japanese savers and the repository for 360 trillion yen ($3 trillion; 2 trillion), should bolster efforts already under way to underpin the ailing stock market.

But critics said the plan was little more than a short-term palliative, and would do little to contribute to genuine reform.

The panel's recommendation is for the savings system to invest in the government's stock purchase corporation by buying the corporation's bonds.

It also calls for postal savings bosses to market mutual fund style investments to individuals, and asks the government to hold off on privatisations to avoid extra shares hitting the market.

Off the bottom

In some ways, the bankruptcy figures suggest there is hope yet for the Japanese economy.

Corporate failures were down in April for the fourth month in a row, to 1,514 cases, according to respected independent forecaster Teikoku Databank.

Companies were increasingly doing business for cash, reducing the risk of being pulled under by clients or partners who were running into trouble, the forecaster said.

But "the potential for rises continues to be there," Teikoku Databank warned in a statement, and economic growth figures due for release on Friday are unlikely to make matters any better.

A survey of economists by the Reuters news agency predicted no growth at all between December and March, making a contraction of 0.1% for the year to March 2003.

Red ink

In the meantime, though, the stock market remains stubbornly low despite a recent surge.

The yen is climbing against the dollar, hurting the exporters on which the economy relies.

Consumers are still spending, but largely through additional borrowing, since the pay and jobs picture remains dire.

And rock-bottom stock prices means the assets held by companies are worth much less, adding to the troubles they have staying solvent and paying their massive debts.


SEE ALSO:
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