Japan's thinktanks forecast economic slowdown

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Sunday, March 25 4:14 PM SGT

Japan's thinktanks forecast economic slowdown TOKYO, March 25 (AFP) - Japan's leading private thinktanks forecasted a slowdown in the domestic economy in the next financial year due to curbs on capital investment and consumer spending, a press report said Sunday.

The 2001-2002 economic growth forecasts by the 16 research and finacial institutes averaged 0.8 percent, down from 1.3 perent for the financial year ending on Saturday, the Nihon Keizai Shimbun said.

The average is also far below the official estimate of 1.7 percent for the 2001-2002 term. The government has declared that it was on track to meet its growth target of 1.2 percent for the current year.

Only two of the thinktanks predicted that the real-term growth rate would improve in the next financial year.

"Many predicted that investment in plants and equipment, which had been led by the information-technology sector, would struggle to grow while it is hard to expect a robust recovery in consumer spending," the daily said.

Both the Daiwa Institute of Research and the Nomura Research Institute predicted a 1.8 percent growth for the next year while nine others forecast a growth of 0.8-1.1 percent, the daily said.

The research arm of Sumitomo Life Insurance Co. Ltd. forecast a contraction of 0.2 percent.

Daiwa expected that production would be adjusted in the April-June quarter due to a slowdown in exports but that "the correction will end in a short period of time due to increases in consumer and capital spending."

But Sumitomo said that the US economic slowdown would depress corporate earnings here with curbs on exports and consumption, according to the daily. "Capital spending will start to slip below year-before levels in the June-September quarter," Sumitomo was quoted as saying.

The 16 thinktanks forecast an average 2.9 percent increase in capital spending in the next financial year, compared with an estimated 4-5 percent expansion in the current term, the daily said.

Fourteen expected consumer spending to improve in t2001-2002 but most forecast increases of around one percent, the Nihon Keizai said.

"Consumer spending will remain stagnant as workers wages struggle to grow," the Japan Research Institute said, according to the daily. "Consumers' sentiment is feared to be depressed due to stock-market debacles and corporate failures." http://asia.dailynews.yahoo.com/headlines/business/article.html?s=asia/headlines/010325/business/afp/Japan_s_thinktanks_forecast_economic_slowdown.html

-- Carl Jenkins (somewherepress@aol.com), March 26, 2001


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