Right of Reply: Itara Umezu

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The Minister Plenipotentiary at the Japanese Embassy answers Hamish McRae

SINCE ITS economic bubble burst at the beginning of this decade, Japan has implemented successive fiscal packages between 1992 and 1995 in order to restore domestic demand-led growth. This amounted to 66,000 billion yen, equal to 40 per cent of the total UK GDP. These measures not only served as a stimulus to the domestic economy, but the resulting increase of Japan's imports from Asia, Europe and elsewhere made an immense contribution to the economies of these regions by absorbing their exports and creating, together with the considerable investment from Japan, many jobs.

In an effort to cope with yet another economic downturn which began in the spring of 1997, the Japanese government announced a series of economic measures worth 33,000 billion yen. These included an increase in public investment and permanent cuts in income and corporate taxes. This amount is equivalent to 20 per cent of the total GDP or the UK's entire current fiscal expenditure. For its part, the Bank of Japan decided to reduce overnight interest rates to 0.25 per cent on 9 September. In addition, new legislation is expected to pass through the Diet soon. It will contribute not only to stabilising the financial system, but to reviving the economy.

Prime Minister Obuchi announced the above measures in August 1998, just after forming his new cabinet. The measures are unprecedented in world economic history, both in their scale and scope.

Japan has had to overcome many serious economic crises in its history. At the present time, the Japanese, both individuals and companies, are well aware of the need for change. Their resilience and adaptability in the face of extremely trying circumstances should not be underestimated.