Delay likely in Japan recovery

THE ORGANISATION for Economic Cooperation and Development forecast yesterday that the Japanese economy could expand by about 1.75 per cent next year, but recent figures and survey evidence from Japan suggest that a recovery is unlikely until late in 1994, writes Peter Torday.

However, the OECD forecast takes no account of any further fiscal stimulus, such as widely expected cuts in income taxes. It expects no growth at all in 1993. The strong yen means the current account surplus is likely to narrow, despite weak imports.

It says income taxes should be cut only if taxes on capital income are raised, widening the tax base. The budget deficit is understated owing to off-budget spending, and a rapidly ageing population means that public debt could 'explode', the organisation warns.