People doubt 'bright signs' in economy

Prime Minister Koizumi Jun'ichiro stated that at long last bright signs are appearing in the economy. The Liberal Democratic and Komei parties are boastful of the "economic recovery under way" as if it were their feat. There are economists say that it is not realistic to deny that economic recovery is under way.

This view is far removed from what a majority of people know and feel every day.

Akahata of November 5 said that the economy throughout Japan is in no position that can be described as the beginning of an economic upturn.

For example, the Bank of Japan's quarterly business survey (tankan) published in September, covering many large as well as small- and medium-sized businesses, showed that no bright signs are applicable to small- and medium-sized businesses.

Large corporations make profits from exports

The index showing the difference between those large corporations in the manufacturing industry who see business as good and those who see it as bad for the first time after two years and 9 months turned to the positive. Among small-and medium-sized businesses, both in manufacturing and non-manufacturing industries, those who see business as bad greatly outnumber those who see business as good, although the rates are smaller than those in the previous survey in June. It can be said that these businesses are struggling, barely keeping their heads above water.

Large corporations and manufacturing industries feel an economic recovery because leading exporters' gain from exports to the United States and Asia.

What is more, large corporations have changed their structure into one that can secure profits even without an increase in sales through corporate restructuring in which costs for personnel and machine parts are reduced to the minimum. In fact, many auto makers expect a big increase in their profits.

Small businesses in distress

In contrast, personal consumption of the working households remains low from the effect of recovery for big businesses. Business for subcontractors and small firms is almost at a standstill. This imbalance creates a vicious circle which prevents the economy from achieving a recovery. That is, the business recovery felt by large corporations does not stimulate domestic demand to lead the whole economy onto a sustainable recovery course.

Even the government Economic and Fiscal White Paper for FY 2003 says that sustainable economic recovery cannot be expected without an increase in personal consumption. The key to real economic recovery is whether economic policy is aimed at boosting the household consumption. The Japanese Communist Party is calling for a drastic change in politics from supporting large corporations to one of supporting people's living conditions. (end)