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Mon, Feb 21, 2005 - Page 12 News List

Japan expects its economy to pick up

AFP AND BLOOMBERG , Tokyo

Japan's economy will pick up again late this year on firm exports and recovering consumption, the finance minister said yesterday after official figures released last week showed Japan was in recession for most of last year.

"I think the economy will be recovering from the latter half of this year," Finance Minister Sadakazu Tanigaki said.

"Consumption has been a problem ... With the jobless rate finally improving, however, [funds from] continuously firm corporate earnings are beginning to flow into households," he said on the private Asahi television network.

Tanigaki also said that exports would be steady due to the firm economies of the US and China.

The US dollar will remain strong, said Tanigaki, citing US President George W. Bush's budget policy announced earlier this month.

"The US economy will probably be on a trend to expand" as the US plans a steady budget, Tanigaki said. "The US dollar will fundamentally remain strong."

Bush on Feb. 7 sent Congress a record US$2.57 trillion budget that would slash spending for such domestic programs as agriculture and housing and slow the growth of defense spending.

Asked to comment on the regulated economy of communist China, Tanigaki said "the Chinese authorities have a good hold of the current situation and are taking appropriate measures" to cool the booming economy.

"But we cannot be confident enough if the policy of the [Chinese] central government is being fully conveyed to local governments or how transparent released figures and data are," he said.

"We have a slight concern over these points," he added.

Japan's Cabinet Office said Wednesday the economy shrank 0.1 percent in the three months to December compared with the previous quarter, giving an annualized drop of 0.5 percent.

The contraction followed a 0.3 percent drop in July-September and 0.2 percent fall in April-June.

But economists said the downturn was relatively mild and the world's second largest economy should be back on track in the coming months as private consumption picks up.

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