OSAKA—A group of economists agreed Monday the Japanese economy is close to bottoming out but were divided over whether it will return to a recovery track in fiscal 1999. The economists were participating in a Kobe forum sponsored by Nihon Keizai Shimbun and the Japan Center for Economic Research (JCER).
JCER Chairman Yutaka Kosai predicted the economy will shrink about 2.5
percent in fiscal 1998 ending March. The economy's bottoming out,
but how quickly an upturn will begin remains to be seen. The turning
point will come when plant and equipment investment touches bottom,
he said.
Shigeru Matsushita, a director at Sanwa Research Institute Corp.,
forecast the economy will shrink by between 2.4 and 2.5 percent this
fiscal year. Worries about the financial system have calmed,
but actual economic activity remains in a severe state,
he noted.
Masaru Takagi, a professor at Meiji University, said, The economy
has bottomed out; judging from industrial production and household
spending figures, it recently started moving upward.
On prospects
for fiscal 1999, Masumi Sato, vice president of Kobe Steel
Ltd. (TSE:5406), said the economy will likely shrink between 0.8 and
0.9 percent, given that capital investment is expected to decline
nearly 10 percent year on year and employee salary cuts will probably
overwhelm the effects of planned tax cuts.
An additional 7 trillion yen or so in government stimulus measures
will be necessary if the government is to achieve its goal of 0.5
percent growth for the year,
he added. Takagi forecast 1.0 percent
growth for fiscal 1999, assuming the government implements an extra 10
trillion yen in pump-priming measures, including 4 trillion yen in tax
cuts.
Matsushita predicted a growth rate of between minus 0.5 percent and
minus 1.0 percent in the absence of additional stimulus measures from
the government. The rate will be minus 0.4 percent if the government
implements 3 trillion yen in actual fiscals pending, or
'mamizu',
he said.
Kosai foresees a negative growth rate even if the government comes up
with additional stimuli. Companies ares till saddled with
inefficient facilities,
he said.