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Japanese Unemployment Returns to Post-War High - 2003-02-28

Japanese Prime Minister Junichiro Koizumi has chosen Toshihiko Fukui as the next Bank of Japan governor, pending Parliament's approval. Mr. Fukui, a veteran of the Japanese Financial industry, will replace incumbent Masaru Hayami, whose term expires on March 19.

Since the nomination was announced Monday, supporters and critics have been quick to chime in with advice on how Mr. Fukui can help boost Japan's troubled economy, which has been in a slump for more than 12 years.

The conservative Yomiuri newspaper says his most urgent task is to map out "drastic" measures to contain deflation, and noted that many economists are skeptical of the central bank's low-interest rate policy.

The Nihon Keizai newspaper, a widely-read business daily, says Mr. Fukui should change the way the central bank oversees monetary policy so that the policies can be put into action more effectively.

Many economists, such as Peter Morgan at HSBC in Tokyo, say how Mr. Fukui will help restore public confidence in the economy remains unclear. "His main job is to provide stability to the financial system and to provide support for the economy. But I think that in the absence of unconventional policy measures, there is not much additional that the Bank of Japan can do," he said.

The latest economic figures underscore Japan's economic woes. The nation's jobless rate for January stands at a record-tying 5.5 percent, up from a revised 3.3 percent a month earlier. The number of people out of work rose to more than 3.5 million in January.

Companies are continuing to cut jobs amid persistent deflation and low domestic demand. The practice is painful for many in Japan, where lifetime employment was taken for granted for decades.

In the earnings sector, the Japanese unit of the U.S. based computer giant IBM reports a fall in annual profits. IBM Japan says its net profit plunged 10 percent for the year to December from the previous twelve months.

The company says sluggish sales for both hardware and software and fluctuating exchange rates are behind the earnings decline.