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Japan's Economic Outlook Mixed - 2003-08-08

A mixed outlook for Japan's economy is seen in the latest data released by the government. And two major Japanese companies have released their earnings figures.

The Finance Ministry says Japan's current account surplus shrank 23.5 percent in June from a year earlier - the first fall in three months.

The data, released Friday, shows an anticipated surge in overseas demand for Japanese goods may be materializing more slowly than expected. The ministry says exports were basically flat, while imports surged nearly 12 percent.

Government officials say any improvement in the nation's economic picture depends on the U.S. economy, because Japan is counting on exports for growth.

The Japanese government slightly upgraded its economic assessment for the first time in five months. The Cabinet Office report for August shows the economy remained roughly flat, but officials insist there are some signs of recovery.

Economic Minister Heizo Takenaka says the report confirms that healthy sectors of the economy are continuing to pick up," he said. "Mr. Takenaka also says the economy had reached a "tipping point" for a sound recovery, because bad loans at banks are decreasing and a system is being created to rehabilitate companies in financial trouble.

Sales at Toyota Motor rose 5.5 percent in the first quarter of the fiscal year, but the automaker's net profit plunged nearly 10 percent from the same period last year. Toyota reported a profit of $1.8 billion. The company attributes the drop to exchange rate fluctuations.

Toyota executive Takeshi Suzuki tells reporters that local production is rising, which generates higher profits. The automaker gets 70 percent of its profit from the North American market.

Overall, Japanese automakers racked up strong sales in the first half of the year. And Toyota, according to industry watchers, appears to be on track to replace Ford of the United States as the world's second largest car maker in terms of sales volume.

Japan's top mobile phone operator, NTT DoCoMo, posted a net profit of $1.6 billion for the April to June period. No comparable figures are available because the company only began to report quarterly results this year.

Analysts say for DoCoMo to become more popular with investors it needs to boost the growth rate for its third generation cell phone service. DoCoMo lags far behind its main competitor in the number of 3G subscribers.