Sakaiya Announces "Signs of Change" in Japan's Economy
March 11, 1999
EPA Director General Sakaiya does not hesitate to make his opinions clear on where Japan's economy is heading. (Kyodo)
In the midst of what seems like an unending recession, Economic Planning Agency Director General Taichi Sakaiya has commented since fall 1998 that he senses the first signs of change in Japan's economic condition. His statements have been prompted by several positive clues, including a bottoming out of personal consumption levels in some areas and a decrease in corporate bankruptcies. There are also other societal trends that point toward a potential, and long-awaited, recovery of the Japanese economy.
Extraordinary Character, Extraordinary Words
Sakaiya's first strong public statement on Japan's economy as EPA director general was at a press conference held in late November 1998: He commented that "a new quickening is beginning to make itself felt." The following month, these words made their way into the agency's Monthly Economic Report, which said, "signs of quickening for future change can be detected . . . despite the fact that the economy is still in a prolonged slump, a very severe situation." The report issued in January 1999 gave the same judgment, but Sakaiya himself went a step further by saying: "Compared to last month, I would say the economy's direction is gradually improving."
Looking at recent trends, in 1998 negative signs were still abundant: The July-September quarter was the fourth consecutive period of negative growth, capital investment saw a double-digit decline, department store and supermarket sales marked their second biggest drop ever, and the annual unemployment rate hit 4.1%, its highest level in Japanese history. Nevertheless, government reports have noted several phenomena as indicators of change. The EPA has stated that "demand for some consumer goods, particularly those seen as a bargain, has stopped declining." These goods include discount items at large-scale retail stores, ultra-compact cars, and household electric appliances. The agency also notes a decreasing number of corporate bankruptcies.
Millennium and Bridal Businesses
Wedding-related demand, meanwhile, looks set to boom in the near future. According to the Ministry of Health and Welfare, the number of marriages in 1997 fell 2.4% from the previous year, but rebounded by 2.1% to about 800,000 couples in 1998. Increased marriages are naturally expected to stimulate the housing market as well as consumption of furniture and other consumer durables. If these couples give birth to children, baby-related goods will also be in higher demand.
Many households seem ready at last to replace the durable goods they have long been holding on to due to a cloudy economic outlook. One private research institute estimates that the momentum for buying new models is likely to continue until 2001 for washing machines, 2002 for refrigerators, and 2005 for air conditioners. Offices, meanwhile, tend to renew their computers on a four-year cycle, and some analysts forecast that 1999 will be a year of major corporate purchases.
Although each of these changes individually may have little impact on the economy as a whole, a spread in positive trends like these may brighten the public sentiment. After all, Sakaiya is not the only one who says ki (spirit) leads the way for keiki (economic trends).
Edited by Japan Echo Inc. based on domestic Japanese news sources. Articles presented here are offered for reference purposes and do not necessarily represent the policy or views of the Japanese Government.