More dismal economy and livelihood is in sight under Koizumi government -- Akahata editorial, June 8 (excerpts)

Japan's economic growth rate for fiscal 2001 (ending March 2002) marks the worst in the postwar period with a negative 1.3 percent growth in gross domestic product (GDP) excluding the influence of price changes.

The figure is a reflection of the major damage which the Koizumi "structural reform" policy has inflicted on the economy and living conditions, which caused a sharp increase in business failures and unemployment in the name of writing off bad loans held by major banks.

Heizo Takenaka, state minister in charge of economic, fiscal, and IT policy, commented on the figure as "following our scenario," which characteristicfally shows the coldness of Koizumi politics.

Domestic demand in total collapse

The minister argued that an increase in GDP for the Jan.-Mar. quarter has confirmed the economic bottoming-out.

Consumption for Jan.- Mar. period increased by 1.6 percent as a reflection of a major upward shift in the data of single households,but these are small in the number of samples and tend to fluctuate in consumption patterns. The Public Management Ministry has to admit to the data not reflecting the real developments of consumption.

The reality is that household consumption continues to shrink further, and investment in equipment is declining by a big margin, with housing investment also declining. In a word, domestic private demand is collapsing in all fronts.

The last resort is that export may substantially increase, with the U.S. economy as a motive power.

The Koizumi Cabinet is taking such feeble signs as a mark of an "economic bottoming-out," and is going ahead with policies of making people pay more for less social services.

Such policies include bills to worsen health insurance systems, which is now under Diet discussion, and tax system changes to increase the consumption tax rate, increase the minimum taxable income, and increase taxes on small- and medium-sized enterprises operating in the red.

In the government plan, the thus accrued revenue will be used to decrease the tax rate of large corporations and the rich.

Economic policy must highlight livelihood

During the record-breaking prolonged economic recession, bad loans held by banks increased by 50 percent, contrary to what the government predicted, and tax revenue for fiscal 2001 will very likely fall short of the budget.

Imposing burdens on the people's livelihood and small-and midsized businesses will have the consequence of making the economy slump further, with fiscal deficit and bad loans expanding.

A change of economic policy which highlights the people's livelihood and small businesses is now sought after more keenly than ever. (end)