Moderate Japan Recovery Expected
Moderate Japan Recovery Expected
Apr. 21, 2002
%mlink(STRY:; PHOTO:; AUDIO:%)
TOKYO (AP) _ The clean streets are glittering with neon lights and bustling with people on the go, barely a panhandler in sight. Pansies bloom in calm neighborhoods seemingly devoid of fears about major crime.
For a nation ravaged by its worst recession in decades, Japan _ or at least much of it _ appears to be thriving.
Sales are up at jeweler K. Mikimoto & Co., with rings and necklaces above 10 million yen ($75,000) especially popular, said spokesman Atsushi Sakaguchi. Visitors at Tokyo's two Disney theme parks surged 27 percent in the fiscal year ended Sunday from a year ago. Sales in Japan at European designer-brand Hermes climbed 23 percent.
``It's not that I don't think about the recession at all,'' 49-year-old Mitsuko Mashiko said after purchasing a 90,000 yen ($670) Hermes bag for her daughter.
``I just don't give it much thought,'' said the flower-arrangement instructor, wearing a Hermes watch and diamond ring and clutching a Chanel handbag.
Many Japanese simply aren't poor. They are among the world's biggest savers, hoarding 1.4 quadrillion yen ($10 trillion) in assets.
The apparent prosperity throughout much of Japan strikes a contrast to the poverty prevalent in many American cities _ the abandoned buildings, the graffiti-covered walls, the loitering and unemployed people.
There's no doubt Japan's economy, tottering in and out of recession for the last decade, is burdened with serious problems that may take years to cure _ massive bad debts at the banks, rigid inefficiencies in its corporate sector, an unemployment rate at near-record highs.
Analysts expect a moderate recovery later this year. But it's likely to be fragile, relying on the rebound in the United States and the rest of Asia to boost Japan's exports.
A recent report by Shinsei Bank predicted private spending is likely to remain sluggish as faltering companies try to pay back loans and keep wages down.
``In this severe economic environment, exports are almost the only factor to lead the economy,'' it said, predicting full-scale recovery only in the fiscal year ending in March 2004.
Despite its setbacks, Japan boasts key strengths that make its perils different from the potential crises that threaten poorer industrializing nations, analysts said.
Besides their solid savings, Japanese people can reap the benefits of having invested over the years in public works like commuter trains that run on time and the highways and bridges that crisscross the island nation.
Nearly all those employed in Tokyo take trains, subways or buses to work. The lack of public transportation is a critical obstacle for jobseekers in America's inner cities.
Japan also boasts a social-welfare system that for the most part offers health insurance to everyone. Illiteracy has been virtually eliminated.
The crime rate, although rising gradually, is also relatively low. The per capita murder rate in the United States is about six times that of Japan's.
And despite the overshadowing mood of doom, the risks of an imminent financial meltdown are slim so far.
While acknowledging that the ballooning public debt and weak banking sector remain problems, international credit-rating agency Fitch Ratings said the risks of large-scale capital flight are remote in Japan, with household ownership of foreign financial assets at a tiny 1 percent of all savings.
Japan may end up poorer in the long run unless it moves forward on economic reforms.
Meanwhile, it's important to remember its strengths, said Koichi Hamada, Yale University professor of economics.
Calculations of public debt and assets show that every Japanese remains a creditor of $8,000 on average, while every American is about $4,000 in debt, said Hamada, who also works in Tokyo helping set economic policy.
``The reason it is important to focus on the bright side of Japan's economy is that if the people start believing in it, feel confident about their futures and choose to actively consume and invest, most of the problems will be solved,'' he said.