Tuesday, December 22, 1998
You know things are tough in Japan when the head of an agency that expects the Japanese economy to manage a mere 0.5 percent real growth is characterized by the Wall Street Journal as a "bull." Yet exactly that metaphor was applied by the venerable American publication to Taichi Sakaiya, head of the economic planning agency. As reported in JEI Report No. 47B, December 18, 1998 Mr. Sakaiya and the EPA found signs of "embryonic movement" in the Japanese economy, enough apparently to earn the "bull" moniker.
In its annual economic outlook adopted December 20, EPA, together with the rest of the Japanese government, took what appeared to be an opposite stance when they penciled in 0.5 percent growth in gross domestic product for the fiscal year that begins next April.
Other recent predictions are even more pessimistic. The consensus forecast of 23 Japanese think tanks and similar organizations is that the Japanese economy will shrink 0.5 percent in FY 1999 on top of a 2.3 percent real decline this fiscal year. Both the government outlook and the private economic forecasts are tentatively slated for discussion in a JEI Report of January 8.
Moreover, outside the government already grim forecasts are being scaled back. In October, the International Monetary Fund predicted the Japanese economy would grow 0.5 percent in the 12-month period beginning in January after contracting 2.5 percent in 1998. In December, the IMF changed its forecast to shrinkage of 0.5 percent next year and 2.8 percent this year. (See www.imf.org.)
The IMF figures that unemployment in Japan next year will average 4.9 percent, putting it higher than the forecast 4.8 percent level of the United States. Never in the postwar period of economic record keeping has Japanese unemployment exceeded that in this country. Moreover, many analysts contend that Japanese unemployment is underestimated, an argument to be reviewed in detail in a January 15 JEI Report..
"JEI's Spin on the News" are the opinions of one of more members of JEI's staff and do not necessarily represent the views of the organization.