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Japan to Continue Economic Reforms - 2002-04-10


The government of Japan has upgraded its assessment of the nation's economy for the second month in a row. Prime Minister Junichiro Koizumi says that despite the encouraging news, he will press ahead with reforming the debt-laden banking sector.

The Japanese Cabinet Office economic report for April says that, while the economy continues to struggle, the nation's worst post-war recession may be close to ending.

It is the first time in almost 22 months that the government raised its assessment for back-to-back months. The global economic slowdown has hit Japan hard, and the country is also struggling with low consumer demand and severe deflation.

The report notes that exports rose last quarter after sliding for nearly two years. It also says that the unemployment rate held steady at 5.3 percent in February, compared to a record 5.5 percent in December.

However, the government warns that more people are likely to lose jobs as companies continue to streamline operations. They also say the economy has not yet turned the corner.

The report made no direct mention of Japanese banks' huge bad debt burden, now estimated at more than $282 billion. But Prime Minister Junichiro Koizumi says he will push ahead with measures to clean up the sector, a key element of his economic reform plan.

Japanese media reports say the government's banking watchdog is expected to report Friday that major banks have to write off $14.5 billion more of bad loans for the last fiscal year then had been previously forecast.