Asia Times: Obuchi takes aim at economic gloom



	January 22, 1999	atimes.com

Japan Economy

Obuchi takes aim at economic gloom
By Suvendrini Kakuchi

TOKYO - Prime Minister Keizo Obuchi is trying togive Japan a much-needed pep talk after forming a coalitiongovernment this week, managing this time to get more than theusual yawn from a public tired of empty promises from theirpoliticians.

Obuchi's speech at the opening of the parliament on Tuesday signaled to many observers adetermination to break what he called a mood of ''excessivepessimism'' about Japan, beginning with a pledge to see theeconomy return to modest, if positive, growth this year.

''I am confident that the nation's economic growth will recoverto the 0.5 percent level in real terms in fiscal 1999,'' he said.

That statement is by no means new - but political analysts sayObuchi's standing and credibility have been boosted somewhat by thecoalition government entered into by his ruling Liberal DemocraticParty (LDP) and the small opposition Liberal Party.

Obuchi in fact approached the Diet session ''on a firmerpolitical footing than before,'' noted Yasumasa Shimizu of theNikkei Shimbun, Japan's leading financial daily.

At Obuchi's urging, the LDP, which lost a number of sears inthe July 1998 election for the Upper House, joined forces with theLiberals this month in order to boost the group's hold in thelegislature and speed up passage of bills.

While the coalition remains a shaky one, because many LDPpoliticians do not support it, the government has produced aglimmer of hope among businessmen and the public for ushering inmuch-wanted stability to Japan.

A succession of uneasy LDP coalitions during the past decadehas slowed the passage of important reform and stalled economicrecovery in Japan.

But the Liberals, headed by a powerful, conservative but reform-minded politician named Ichiro Ozawa and a group of like-mindedlawmakers who broke away from the LDP years ago, is seen as a moreworkable coalition.

''The aim of the new administration is to strengthen thestability of Obuchi's government and speed up economic andadministrative reforms,'' LDP party secretary Takeshi Noda said.

Ozawa, who called the LDP ''an old people's home'' when hewalked out in 1993, says he decided to collaborate with the LDPbecause he shared with Obuchi a sense of ''national crisis''.

''This shared sense of crisis is what makes the new Cabinet astronger one,'' commented the 'Yomiuri Shimbun', Japan's lastdaily, last week. The bulk of the Cabinet remains the same,however.

Optimists say Ozawa's entry could lead to some change in thepolitical uncertainty hounding the country for some time. Ozawahas called for less bureaucratic interference and more personalresponsibility on the part of the politician, a position that haswon him media approval.

His goals include changing Japan's peace constitution andgetting a more active role for Japan internationally.

Recent opinion polls indicate the new government has gained forObuchi higher approval rates since its formation Thursday lastweek. An opinion poll published by the 'Asahi Shimbun' saidsupport ratings hover at 32 percent for the new administration, upfrom 28 percent at the end of December.

Polls cited stability as the main reason for growing supportfor Obuchi, who was derided as a colourless figure when he tookover the premiership from Ryutaro Hashimoto last year.

A key test of Obuchi's leadership will be underway soon, asJapan tries to repair an economic downturn, flagging confidence inthe economy, and a battered image overseas.

At home, experts expect the LDP, because of its tie-up with theLiberals, this time to manage to pass the new budget of 81.6trillion yen (724 billion U.S. dollars) without the usual delaysand haggling with opposition parties that control the Upper House.

Under the reforms proposed by Obuchi, there will be a tax cutand a review of protective regulations designed to energisedomestic demand and stimulate the economy. Ozawa is also callingon the LDP to suspend a consumption tax.

Analysts are now watching to see whether the LDP is being heldat ransom and may be forced to accept some of the Liberalproposals, lest it be abandoned in the coalition. The Diet ismeeting until the end of March, which marks the end of Japan'sfiscal year.

But while officials try to pump more optimism into the public,it is not easy to ignore the signs of recession everywhere.

Economic Planning Agency director-general Taichi Sakaiya madethis point this week that despite its current problems, Japanremains a formidable global player in business. His own agency,however, said in a monthly report that even with some signs ofimprovement, the economy remained in ''very severe'' condition.

Industrial output dipped by 5.5 percent in November, banklending is shrinking at nearly 5 percent. The economy is expectedto shrink for the third straight year in the next fiscal year,despite the government's projections.

Perhaps most telling are opinion polls at the end of the yearshowing 76 percent of respondents saying they did not believe thegovernment's many stimulus plans would trigger an economicturnaround.

(Inter Press Service)

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©1999 Asia Times Online Co., Ltd.