Economics and Financial Services Minister Heizo Takenaka sought to play down concerns about Japan's economy on Thursday, saying data showing weaker than expected growth was an adjustment in an upward path and not the beginning of a downward corrective phase. Takenaka, speaking to business leaders in the western city of Nagoya, also said he did not think soaring crude oil prices would be sustained, and that high oil prices would not have a decisive impact on the economy. Oil prices surged to a new high above $47 a barrel on Wednesday on optimism of growth in the world economy generating demand, and amid ongoing violence in Iraq. Japan's gross domestic product (GDP) was a real price-adjusted 1.7 percent in annualised terms in the three months to June, mainly due to sluggish capital spending.
Economists had expected growth of 4.1 percent. Takenaka said the 1.7 percent figure was not low, and that the economy was returning to "cruising speed" -- a speed most efficient for economic growth. The economy grew over 6 percent in the two quarters to March. On the banking sector, Takenaka said it would be possible for banks to achieve numerical targets on disposal of non-performing loans by the end of September, a half-year earlier that the government's imposed deadline. The government has told major Japanese banks to halve the ratio of non-performing loans to total loans by March 2005, but an improving economy and a rising stock market has helped speed up the process.///www.reuters.com