Japan 2002--A Contrarian View

Reviewed By Hitoshi URABE

Article:
"Japan 2002--A Contrarian View"
http://www.forbes.com/global/2002/0722/014.html
(by Caspar W. Weinberger) Forbes

Comments:

As can be imagined from the title, the idea the writer of this article sets forth may be somewhat contrary to the common sentiment, in that it tries, at least, to show the bright side of Japan's economy.

Ever since the collapse of the economic bubble more than ten years ago, whenever Japan's economy was referred to was in a depressed mode. It was almost a sin to bring up the positive aspects of it, and everyone became used to gloomy forecasts. Sometimes it seemed as though people were even working hard to achieve that projected gloominess.

In April, IMF publicized its forecast that Japan's economy will contract by one percent this year making it the only negative figure granted among the industrialized countries, which induced very little response. Then Moody's degraded the country's debt to the level of A2, an action of violence almost, which led only to the government of Japan expressing disagreement. The apathy could be regarded as though it was a symptom of Japanese people to have become obsessed with pessimism.

The article introduced here is so a nice change of tune in that it sees a possibility of Japan's economy to recover significantly by the end of the year.

The article first looks at the dark side and lists them. Some on the list are, banks with bad loans, high unemployment, dwindling stock prices, declining corporate earnings, and depressed tourism.

It then turns to the bright side. It refers to recently reported signs of recovery such as the encouraging GDP figures, increasing exports, and better corporate sentiments. Then it introduces strong industries by mentioning recently announced supercomputers and magnetic levitation train technology to support the speed of 550 kilometers per hour. As for consumers, it explains that they are willing to pay for what they really want, citing the explosive growth of Docomo's i-mode mobile phone service.

The article goes so far as to say that the Japanese "are remarkable for their productivity and inventive genius, as well as their willingness to work long and hard," while making a point that Japan has the world's largest pool of household savings of nearly $11 trillion.

Does Japan really have a good chance to recover, then?

To answer this, the author places a condition. The conclusion of the article goes "If Prime Minister Junichiro Koizumi can regain his popularity and political strength to reform the banks and his nation's fiscal policy, there is no reason Japan cannot regain its strong economic standing in Asia and the rest of the world."

It appears that Mr Koizumi, though experiencing a downslide of popularity since earlier in the year, still maintains the viable image as a reformer in various sectors. The Asahi Shinbun reports that in its latest poll conducted over the last weekend, 47 percent of the respondents expressed support for Mr Koizumi, a significant rebound from the last month's 37 percent figure, and the people who do not support the Prime Minster decreased to 38 percent from 46 percent. It could be that Mr Koizumi is about to be given another chance, which may be a comforting news to perhaps more people than formerly anticipated.