[ Keidanren | Press Conference ]

Chairman Imai's Press Conference

January 7, 2002

Following is the gist of remarks made by Mr. Takashi Imai, Chairman, Keidanren, at a press conference after annually-scheduled new year party hosted by four major economic organizations on 7 January 2002. Translation is rush and tentative, and sequence of the gist does not necessarily coincide with words delivered.

(Asked to forecast Japanese economy in 2002)
Now private sector facilities investment is down and jobless rate is going up. The government is providing the second supplementary budget for fiscal year 2001 which would have impact on the first half of fiscal year 2002. By the second half of fiscal year 2002, I expect the U. S. economy to recover. Now Japan and the U. S. are on a same plate. When the U. S. economy recovers, Japanese economy would also recover. However, as the growth for fiscal year 2001 is expected at negative one percent, I would expect almost zero growth for fiscal year 2002, which is still better than 2001.

(Asked if what the Prime Minister Koizumi says of "pain" has already come)
Japan is in the transition period, a modal shift from government-led to individual-led growth. In the days of Meiji, Taisho and Showa, the government led all the growth attained by the country. However, we are observing failures of all the government promoted policies since the era turned Heisei. It is in this transition period Mr. Koizumi was elected Prime Minister and enjoying 70 to 80 percent popular rating. People of Japan therefore support the Prime Minister's policies and "pain" accompanying reforms. I foresee that his reforms would take two to three years to accomplish.

(Asked what is the requirement for Japanese economy's survival)
Japan is a country without resources so it must create a free trade world. Meanwhile, Japanese businesses gradually lost competitiveness with appreciation of Japanese Yen since the mid 1980s. So it is natural for Japanese manufacturers to shift production to off shores, and on domestic soil we must create something unique and advanced, with very high value addition. In a sense, Japan must promote free trade and technological development in order to survive.

(Asked to forecast the future of Yen-Dollar rate and necessity of tax cuts)
I foresee the Yen to decline under the current situation, but Asia would cry out loud when the rate approaches 140 marks -- so I believe the rate will float between 120 and 140. Theoretically speaking, public works spending is more effective than tax cuts. However, the Japanese government tax income has declined from about 60 trillion yen to about 46 trillion yen because of the previous tax cuts. This makes me to believe that consumption won't rise even if further tax cuts will be conducted.

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