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Japan Fighting to Avoid Recession, Economists Say - 2002-12-27


Economic numbers from Japan underscore the nation's economic woes, and another foreign company takes a stake in a banking giant's bad loans.

Japan's industrial output had its largest fall for the year in November, plunging 2.2 percent from the previous month. That is the third straight drop, and worse than most forecasts.

Economists say Japan may face an uphill battle to avoid its fourth recession in just 10 years.

Japan's unemployment rate for November stands at 5.3 percent, a slight recovery from a record high of 5.5 percent in October.

The number of people out of work fell to nearly 3.4 million last month, the first drop in more than a year and a half. Economists say this indicates that many people are dropping out of the labor market.

Labor Minister Chikara Sakaguchi tells reporters that employment conditions will pick up. He adds that he needs to see if cleaning up bad loans at Japan's banks will affect the job market next year.

The trend of foreign investors buying up distressed Japanese companies, real estate and loans continues as the country's economy remains sour.

In the latest such deal, U.S. investment bank Merrill Lynch says it will buy a stake in the $8 billion portfolio of non-performing loans held by Japanese banking giant UFJ.

The deal will give UFJ capital at a time when it is under heavy financial pressure from stock market losses and non-performing loans.

Investment bank Lehman Brothers and investment partnership Loan Star Funds, both based in the United States, have recently announced similar deals. They have purchased assets or debt owned by struggling companies.

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