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Japan 'No Longer in Recession,' Says Koizumi - 2004-01-23

Japan's prime minister says his country is no longer in a recession. And two more Japanese companies have released solid earnings reports.

Prime Minister Junichiro Koizumi says the world's second-largest economy has recovered from a long slump. It is the first time he has made such an assessment since taking office three years ago.

Mr. Koizumi told Parliament that his economic policies are showing results and Japan is no longer in a recession.

The prime minister says corporate profits are picking up and capital spending is rising, helping the economic growth rate.

Japan's economy has been bolstered mainly by increased exports to the United States and other countries.

The Japanese government has upgraded its economic assessment for the first time in two months.

But a Cabinet Office report warns that the rising yen could threaten the improving business conditions. The government says it is prepared to act to ensure the yen's stability against the dollar. Japan sold 20 trillion yen - equivalent to $187 billion - last year to try to control the currency's rise against the dollar.

More signs of an improving economy are seen in corporate earnings reports. The country's largest Internet portal says record advertising sales and a brisk online auction business helped its third quarter net profit soar 87 percent from the same period last year. Yahoo Japan says it netted $63 million during the quarter.

Sony Ericsson, a Japanese-Swedish joint venture making cell phones, is reporting its second consecutive quarterly profit. The company credits rising sales of phones with built-in cameras for helping it earn $55 million in the fourth quarter of 2003. That is a sharp turnaround from the previous year when it lost $87 million in the fourth quarter.

Still, some analysts say they are disappointed with the number of phones sold. They blame a shortage of miniature cameras and color screens, which has plagued the entire industry.

There is turbulence at one of Japan's airlines. Japan Air Systems says it might have to ground dozens of flights a day for the next few weeks. Inspections have found cracks in the compressors of some Pratt and Whitney jet engines. Hundreds of flights have already been canceled while checks and repairs of the aircraft, manufactured by McDonnell Douglas, are done.