30 October 2001, 08:12  Japan economy may contract in FY 2002: Takenaka

TOKYO, Oct. 30 (Kyodo) - Economic and fiscal policy minister Heizo Takenaka said Tuesday it is possible that the Japanese economy will contract in the next fiscal year beginning April 1, 2002. "The (minus) figure may be possible," Takenaka told a news conference in reference to the government's fiscal 2002 economic forecast now being worked out. If minus growth is confirmed, it would be the first time in the postwar period that Japan's economy will have contracted for two consecutive years. It would also be the first time for the government to project negative growth in its official economic forecast, which is to be released in December together with the next year's budget plan. For the current fiscal year, the government is expected to revise downward its economic forecast shortly, from the originally projected 1.7% growth to negative growth of around 1%, government officials said. Takenaka attributed his gloomy outlook to the fact that the slump in the U.S. information-technology sector is severer than expected and that the aftershocks of the recent terror attacks in the United States are rippling through the Japanese economy. "Suppose the U.S. economic recovery were to be pushed back to the second half of 2002, about a year later than expected, (the negative growth in Japan) may be possible," he said. The Bank of Japan also said in its latest economic outlook released Monday that the nation's economy may contract in fiscal 2002, with its growth projection ranging from minus 1.1% to plus 0.1%.

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