--Japan's Aso says sluggish personal consumption "problematic"
--Japan's Aso: Oct-Dec 0.8% GDP growth stronger than expected
--Japan's Aso says can't be optimistic on future capital spending
--Japan's Aso says he's worried about weak nominal GDP
--Japan's Aso: 1.7% FY01 GDP growth goal less certain than FY00 target
--Japan's Aso: Weak consumption partially due to price falls
--Japan's Kawade says private-sector recovery "delayed"
--Kawade says Japan's economy slowed in 2nd half of 2000
By Shigeo Kodama and Reiko Mizutome
Tokyo, March 12 (BridgeNews) - It is highly possible the government can meet its forecast of a 1.2% growth rate for Japan's real gross domestic product (GDP) in the 2000-01 (April-March) fiscal year, Taro Aso, Minister of State for Economic and Fiscal Policy, said Monday. It is, however, less certain said Aso, whether the GDP can meet the government's forecast of a 1.7% rise in 2001-02.
Aso was concerned about prolonged weak private consumption, falls in prices and future capital spending.
* * * "Sluggish private consumption is the most problematic factor, although the 0.8% gain in the October-December real GDP was stronger than my expectation," said Aso, speaking after the release of October-December GDP data.
"I cannot be optimistic about capital spending in the future," due to the recent weakening of machinery orders data, which is believed to lead capital spending by 2-3 quarters, noted Aso.
The Economic and Social Research Institute (ESRI) in the Cabinet Office said earlier Monday that Japan's real GDP for October-December rose 0.8% from the preceding three months. That was an annualized 3.2% on a seasonally adjusted basis after it declined 0.6% in the previous quarter. Private consumption, which accounts for about 60% of real GDP, fell 0.6% compared to the three months before. Capital spending posted a 6.8% rise, the biggest gain since January-March 1989, according to the ESRI. The institute estimates that, even if the January-March real GDP were to fall 0.4% on quarter, the real GDP in fiscal 2000-01 could meet the government forecast of 1.2% growth.
Private consumption has not been ignited yet, because companies continue to use profits to repay loans to financial institutions, instead of increasing workers' salaries or boosting their labor force, Aso said. Aso also showed caution on the prospect of prolonged falls in prices, saying, "I continue to focus on that nominal GDP showed weaker movement than real one," noting that "(companies) operate their business on a nominal basis."
Nominal GDP in October-December posted a 0.2% rose on quarter, lower than the 0.8% gain of real GDP, according to the ESRI.
Also, the GDP deflator, a measure of inflation has showed falls on year for a consecutive 10 quarters through October-December, the institute said.
Further, private consumption remains weak, partly because prices of goods continue falling, although sales on volume basis have tended to improve, Aso said.
Meanwhile, Eiji Kawade, vice-minister for economic and fiscal policy at the Cabinet Office said, "Recovery in the private sector has been delayed, or slower than the government's expectation made in late 2000." Asked by a journalist whether the government will change its scenario that the economy will achieve a self-sustainable recovery led by private demand, t Kawade did not respond the question directly. He suggested, however, that the government could revise the forecast in its monthly report for March to be released on Friday.
Kawade admitted that the economy slowed in the second half of 2000 compared to the first half. According to the ESRI, real GDP in July-December fell 0.1% from January-June, after showing a 1.8% gain in January-June.