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More Signs Point to Japan's Economic Recovery - 2004-06-11


New statistics show the Japanese economy continues to recover. Meanwhile, European luxury carmakers are about to get some competition from Japan in the high-end market.

The Japanese Cabinet Office says the country's gross domestic product grew 1.5 percent in the first fiscal quarter from the last three months of 2003. Analysts say this is the eighth consecutive quarterly gain in GDP and shows Japan's economy is continuing to gain steam.

The gain is partly being attributed to bigger inventories in the automobile and industrial machinery sectors.

But former U.S. commerce secretary and trade representative, Mickey Kantor - now a senior advisor to the financial services company Morgan Stanley - says, so far, all segments of Japanese society are not benefiting from the country's recovery.

"Like the United States, I think it's an uneven recovery and there are many Japanese smaller and medium sized businesses as well as Japanese folks who live outside the major urban areas who are not doing as well," said Mickey Kantor.

Japan's corporate goods price index rose 1.1 percent in May from a year earlier. The Bank of Japan says the climb is the largest in more than six years, reflecting rising prices for industrial commodities, such as crude oil. The index shows Japan's overall deflationary trend is coming to an end, though prices of many consumer goods, such as personal computers, are still declining.

Japan's top automaker is hoping for a bit more respect at home. It is bringing its overseas Lexus luxury brand to Japan. The company plans next summer to open 180 Lexus dealerships in Japan that will resemble fashion boutiques more than traditional car lots.

Industry analysts say Lexus will compete head-on against Mercedes and BMW. But BMW Japan president Jesus Cordoba says he is not concerned.

"We know them in the United States and Europe,: he said. "Basically, for us, Lexus is not a threat."

A top Japanese importer of Mercedes sedans says his customers are big fans of European brands and he doesn't expect many will be lured to the Toyota-made luxury cars.

At home, Toyota has a 30 percent share of the market for high-end sedans priced above $45,000, compared to its overall domestic market share of 42 percent.

A Japanese company is planning to refine 20,000 barrels of crude oil a day for PetroChina. Nippon Oil, Japan's largest refiner, says it intends to sign an initial nine-month contract with the Chinese company next March.

China's refining capacity is reported to be at its peak with demand rising about 10 percent a year at present.

Analysts say the deal will allow Nippon Oil to establish a foothold in the Chinese market, which last year overtook Japan as the world's second largest oil consumer.

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