Exports ease Japan's economic unraveling ease
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TOKYO — The Japanese economy is starting to bottom out as stronger growth in exports helps support the manufacturing sector, the government said yesterday, upgrading its assessment for the second month in a row.
Associated Press
"The economy is still in a severe situation, but it is showing movements toward bottoming out," the Cabinet Office said in its report for April.
Job-seekers peer at computer screens at the Hello-work employment agency in Tokyo. Japan's unemployment rate in January and February stood at 5.3 percent, down from December's 5.5 percent.
It was the first time since June 2000 the government upgraded its assessment for two consecutive months. In its March report, the government said: "Some signs of bottoming out can be seen."
The report underlines the signs that a rebound in demand overseas will support the economy. Japan has been fighting a slowdown for more than 10 years, and its banks have a large volume of loans gone sour.
"Exports and industrial production are almost bottoming out," the report said, lifting its assessments of both these key components.
A recovery in the U.S. economy is bolstering global manufacturing, and continued improvement in the world economy is expected to prevent Japan's economy from deteriorating further, it said.
Japanese businesses have been trying to turn themselves around, reducing jobs and inventory and holding back on spending.
While Japan remains in a "difficult situation," the Cabinet Office report said, the first back-to-back upgrade in 22 months reflects a surge in production of computer parts by such manufacturers as Nitto Denko Corp., Sanyo Electric Corp. and Sharp Ltd. to meet demand from a recovering United States.
Some analysts warn that Japan's recovery, even if it comes later this year, will remain fragile as long as the rebound is overly reliant on overseas growth.
"We do see some positive signs, but the credit concerns and nonperforming loans — these problems are persistent," said Ayako Mitsui, an economist at UBS Warburg Japan. "The economy is very fragile."
Meanwhile, the jobless rate held at 5.3 percent in February, below December's record 5.5 percent, and business sentiment halted a yearlong decline in March.
The government has forecast the economy won't grow at all in the fiscal year that began April 1. That's because consumer spending, which makes up 55 percent of the economy, isn't growing, and businesses are spending less, the report said.
