Recovery may be in sight but the bubble hangover lingers on
VIEW FROM TOKYO
Monday 05 February 1996
But after a run of bad publicity - from the Daiwa Bank bond losses to financial scams by senior bureaucrats - the men from the ministry appear finally to have some good news. Next week, in its monthly report on the economy, the Economic Planning Agency may make the announcement Japan has been awaiting since 1992: that, after four and a half years of near- zero growth, the economy has started to stir once again.
Whether or not the EPA uses the magic word "recovery", there apear to be good reasons for low-key optimism. The mighty yen, which last April was strangling export industry at a high of 79.75 to the dollar, is back under control - the dollar was trading last week at about 107. After an alarming plunge last summer the Nikkei Average is comfortably above 20,000, after a low of 14,295 in July. And recently published economic data suggest persuasively that the economy turned a corner at the end of last year, and that the hangover from the bursting of the late Eighties bubble is beginning to clear.
Industrial output rose for the third successive month in December, up a modestly cheering 0.8 per cent, after a 1.5 per cent rise in November. Housing starts in the same month were also up a fraction, and machinery orders rose 2.1 per cent. These good omens notwithstanding, there is a palpable reluctance among analysts and bureaucrats to finally utter the R-word. "The next couple of quarters will provide some real growth surprises," says Jesper Koll of JP Morgan, "but after that the risk of a brake on the economy is very high."
All responsible analyses echo this caution. In hangover terms the fear is this: that, despite purging itself of the excesses of the bubble, the poor old economy is still in a nauseous and vulnerable state, liable at any moment to come down with a stinking cold.
Those modest growth indicators are balanced by an alarming number of stubbornly negative factors, which suggest that ordinary Japanese are unlikely to feel the benefits of the putative recovery for a long time. Unemployment remains at a record 3.4 per cent but possibly twice as much again. The social stigma of claiming welfare and the disinclination of Japanese companies to sack workers, makes counting the unemployed a difficult task. Firms have dealt with the slump by freezing recruitment rather than imposing redundancies: among the 15-24 age bracket, unemployment is 6.1 per cent, and many of the jobless graduates generated by this policy are unregistered.
So it is a little suspicious to find that personal consumption is on a gentle upward incline.Pessimistic economists explain this by reference to the unprecedented series of national disasters that struck Japan last year. After the Kobe earthquake, and the Sarin nerve-gas attack on the Tokyo subway, the naturally cautious Japanese householder reacted by cutting his spending and saving his income. The lowering of this psychological barrier has produced the illusion of a consumer boom, which - the reasoning goes - will dissolve in the face of growing unemployment.
In a sense, the apparent upturn should come as no surprise. Last August, a 73,000bn public spending programme was unveiled by the government, criticised at the time as an unimaginative response to the crisis of stagnation. Given its scale what is perhaps most striking about the glimmerings of recovery is how faint they have been. The government's huge payout has contributed to a budget deficit expected to amount to 6.2 per cent of GDP this year. Even if there were ready funds for another public spending spree, the public is in no mood for further squandering of its tax cash.
When last year's dose of fiscal Paracetamol wears off,the recessionary headache may throb as painfully as ever.
World's most lethal spider found under a bunch of bananas
Rumours that the star wants to move on to pastures new
Comedian says he 'never laughed as hard as I have writing with Rik'
- 1 Jack the Ripper: Scientists who claims to have identified notorious killer has 'made serious DNA error'
- 2 Ebola outbreak: What is bushmeat – and is it to blame for the disease that has killed thousands?
- 3 Star Wars memorabilia called a 'bit of plastic' by Antiques Roadshow's Fiona Bruce valued at £50,000
- 4 Meet Thea, Norway's 12-year-old child bride
- 5 Russell Brand might seem like a sexy revolutionary worth getting behind, but he will only fail his fans
Ebola outbreak: What is bushmeat – and is it to blame for the disease that has killed thousands?
Oscar Pistorius sentencing: Olympic star must serve 10 years, prosecutor urges
Isis fighters 'crucify' 17-year-old boy in Syria
Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
Oscar Pistorius sentence: Athlete's wealth and notoriety provoke an overdue debate on South African prisons
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Sorry Judy Finnigan – Ched Evans is no less sickening than an alleyway rapist
Residents should throw a street party and mix with immigrant neighbours, councils told
Workers 'could be forced to pay £5 a week' to get benefits
Russell Brand threatened with arrest after filming outside Fox News headquarters
Amal Alamuddin calls for the return of the Elgin Marbles from Britain: 'Injustice has persisted for too long'
iJobs Money & Business
£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...
£27000 - £32000 Per Annum: Clearwater People Solutions Ltd: Our large charity ...
£50000 - £55000 per annum + bonus + benefits: Ashdown Group: IT Relationship M...
Highly Attractive Salary : Austen Lloyd: NOTTINGHAM - BRILLIANT FIRM - You wil...