GENERAL SURVEY
Vol.32-No.09 September 1,1993
Recent Economic Trends-EPA Notes Bottoming Out-
At a Cabinet meeting to receive the monthly economic report, held on the morning of June 10, the Economic Planning Agency (EPA) announced its assessment that "the economy has nearly hit the bottom in its decline." The EPA attributed its conclusion to a virtual end of inventory adjustment in April. For 18 months the monthly declines (versus the same month of the previous year) in industrial production had exceeded the decline in inventories, but the relation between the two factors was reversed in April. Furthermore, public works investments and housing starts are firming though overall personal consumption remain weak. However demand for some consumer durables, such as home electric appliances has shown recovery, and signs of a bottoming out of the decline in department-store and supermarket sales have begun to emerge. The EPA explains that what is meant by the bottom of an economic downturn in the wake of this situation is that the nation's economy has pulled out of its worst period and is picking up but has yet to be on its way to a full recovery." It sees expansion of plant and equipment investment and personal spending, two major pillars of domestic demand, as essential for full-fledged economic recovery to take place.
Meanwhile, indicating that even though inventory adjustment traditionally worked to invigorate production, this is not necessarily so in the current period. MITI was cautious about concluding the bottoming out of the economy. Furthermore, it said it wants to continue carefully watching economic trends, voicing concern over the possible adverse effects of the yen's sharp rise on the economy. MITI was thus pessimistic about the economy having reached its nadir, only noting that "the economy remains sluggish, overall, though it has begun to show signs of recovery." Government sources responded by contending that the bottoming out of the economy is only the EPA's view and not that of the entire government, noting that "we want what is described in the monthly economic report to be our own view."
Despite the EPA's statement that the economy has bottmed out, the business outlook continues to be dim. Future economic trends are thus much debatable.
New Minister of Labour
The new Hosokawa Cabinet was launched on August 9, bringing an end to the Liberal Democratic Party's grip on power since 1955.
The seven parties and one parliamentary group make up the new non-LDP, non-Communist coalition government led by Morihiro Hosokawa.
Chikara Sakaguchi, a Komeito Lower-House member, was appointed the new minister of labour. Born in Mie Prefecture, Dr.Sakaguchi, 59, is a gentle, serious-minded person of wide reputation. Formerly a medical doctor specializing in preventive medicine and public health, Dr.Sakaguchi headed the Red-Cross Blood Center in Mie Prefecture. In 1972 he abdicated an assistant professorship at a university and turned to politics. Serving his sixth term in the House of Representatives, he was an executive member of Lower House panels such as the Social Labour Committee, the Special Committee on Pollution Countermeasures and the Finance Committee. An expert on policy, Dr.Sakaguchi has long been a member of the party's policy board and had become its chairman.
Following his appointment as minister of labour, Dr.Sakaguchi said, "I would like to create a working environment with comfort and incentive. Toward this end, the first step to take is countermeasures to deal properly with an aging society. Efforts should also be made to enable women to advance further into the workplace, with due consideration to the declining birthrate. Regarding shorter work hours, the realization of the 1800 work hours goal is still a few years away. I will tackle this in consideration of smaller-scale firms."
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