Economic growth in Japan takes a hit

Associated Press

TOKYO — Japan plans to revise down its economic growth forecast for the current fiscal year because of economic weakness in the United States, a major newspaper reported yesterday.

Late last year, Japan set a target of 1.7 percent growth for fiscal 2001 through the end of next March, but the mass-circulation Asahi newspaper said the government has been forced to change its outlook because of the "worsening of the domestic economy" caused by U.S. weakness.

The United States is Japan's biggest trading partner.

The Asahi said that officials will determine the size of the revision after June, when the government releases gross domestic product data for the January-March period and the current fiscal year.

Other negative factors hitting the economy to be considered in the revision are corporate bankruptcies and worsening unemployment as banks write-off massive bad debts, the report said.

Last Friday, Japan unveiled an emergency package that set a two-year deadline for major banks to dispose of their riskiest bad loans, which have an estimated total of 13 trillion yen ($104 billion).

The non-performing loans — a legacy of the collapse of Japan's asset-inflated economy of the late 1980s and early 1990s — have crippled the world's second-largest economy as it struggles to emerge from a prolonged downturn.