 Economic stagnation persistently felt despite favorable indices The Cabinet Office on May 17 reported that Japan's gross domestic product (GDP) in the January-March period increased by 0.6 percent from the preceding quarter. Economic and Fiscal Minister Takenaka Heizo commented on the same day that the index is proof that the economy has entered a recovery phase. Akahata of May 18 said the people perceive the economy to be stagnant. The gist of Akahata's analysis follows: Workers' compensation has decreased for four straight years under the Koizumi Cabinet, with a 1.1 percent drop in the first quarter over the previous quarter. Though household consumption increased, the growth is weak because it is due to seasonal factors such as increased kerosene prices and pollen allergy outbreaks. Exports, the other component which used to support GDP growth, declined by 2.3 percent in unadjusted terms. The decline seems to be the consequence of a worldwide inventory adjustment of IT-related products as well as tight money policies in the United States and China. The decline in exports casts a shadow over the government scenario of economic growth dependent on exports. In the face of bleak circumstances, Takeneka is determined to support corporate restructuring in which workers' share in profits is further reduced. It is concerned that the government is forcing the people to pay more by using the nominally favorable economic indices as the pretext to abolish tax cuts for ordinary people, increase pension premiums, and increase the consumption tax. It is necessary for the public to call for a government policy that is based on the actual conditions of household economies. - Akahata May 18, 2005 |