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Japanese Economy Still Fragile Amid Global Uncertainties

The Japanese government has left its overall assessment of the economy unchanged from the previous month. The monthly report for April says the economy remains generally flat while uncertainty persists.

The Cabinet Office report warns that the lackluster U.S. economy and the outbreak of Severe Acute Respiratory Syndrome are putting pressure on the Japanese economy. The benchmark Nikkei Stock index sank to new 20-year lows during the week.

Economics Minister Heizo Takenaka said there are a few encouraging signals regarding the economy, including the healthy level of exports to China and other Asian countries. But Mr. Takenaka told reporters there are fresh concerns about the world economy, including how it will be affected by the challenge of reconstructing Iraq.

A Japanese credit research agency reports that corporate bankruptcies and debt dropped in March from a year earlier. However, Teikoku Databank warns that the tough economic climate means Japanese companies will continue to fail at a high rate.

The number of corporate failures declined 12 percent in March. But bankruptcies in the services sector hit a record high because several golf courses and resorts went under. Debt left by insolvent companies fell 42 percent. But more bankruptcies are expected as the government speeds up its plan to push banks to shed non-performing loans.

Japan's top two largest automakers are making some model changes in hope of increasing revenue in the home market.

Toyota has introduced a new version of its hybrid gasoline-and-electric powered car, the Prius. The advanced model, sporting more powerful acceleration and better fuel efficiency, will first go on sale in Japan. It will be introduced in the United States later this year.

On Friday, Honda began selling a U.S. built sport utility vehicle in Japan. The model, called the Element, is targeted at young buyers. The company says its strategy with the Element, as well as the Canadian-made MDX sport utility vehicle introduced last month, is to appeal to Japanese consumers who like Western-made products.