Asia Times: Japan: Unsolved problems and bad IMF advice


	May 31, 2000	atimes.com

Editorials

Japan: Unsolved problems and bad IMF advice

IMF first deputy managing director Stanley Fischer met Bank of Japan governor Masaru Hayami and Finance Minister Kiichi Miyazawa on Monday and - as is common for his institution - dispensed some wrong-headed advice: ''I think it would be good if [Japan] considered an additional budget at an early date,'' Fischer said, according to a Ministry of Finance official who attended the Fischer-Miyazawa meeting. In response to the IMF official's suggestion, Miyazawa said the government would decide whether or not additional fiscal measures were needed after the release of April-June gross domestic product data in September.

As is common for Miyazawa (and his institution), the finance minister was punting - or hedging if you prefer that glorified financial term for indecision. Some encouraging April economic data will have persuaded Miyazawa that there was no need to quickly endorse Fischer's advice, while, of course, no senior LDP politician would ever foreclose the possibility of allocating more taxpayer money to pork-barrel projects in the future.

As for the positive April data, hopefully un-cooked, the Management and Coordination Agency announced Tuesday that Japan's jobless rate fell to 4.8 percent from March's 4.9 percent, while spending by wage earners in April was 366,300 yen on average, up 3.6 percent in real terms from a year earlier. The news prompted Taichi Sakaiya, head of Japan's Economic Planning Agency, to tell a regular Tuesday news conference that, ''Looking at the April economic data, the economy is recovering as I had expected. I think we can declare an autonomous recovery soon.'' The man seems to have recovered quickly and unscathed from the chiding he experienced last week for his agency's ''discretionary'' handling of fourth quarter of 1999 GDP data.

Well, much of this is the same old back and forth on recovery, on both the data and policy sides, we've been treated to for over a year. The only difference in recent months is that with elections coming soon (June 25) the comments by government officials have become decidedly more optimistic. But after spending well over a trillion dollars in the past 18 months to get the economy back on track, shouldn't those officials perhaps be seriously asking themselves why the economy isn't growing by 3 or 4 percent a year rather than haggling over a decimal point or two in the below 1 percent range? If they (and Mr Fischer) want to get a good whiff of what's really happening, has gone wrong and is continuing to go wrong with the Japanese economy, they need look no further than a just published report on the Fair Trade Commission's warnings on ''Unfair Discounting'' by retailers. We reprint excerpts from a Monday Nikkei release on that without further comment; it speaks for itself and speaks volumes.

Monday, May 29, 2000

FTC Warnings On Unfair Discounting Soar 350% In 3 Years
(Title suggested by Rick Katz of the Oriental Economist: ''Ever-vigilant against competition''.)

TOKYO (Nikkei) - The Fair Trade Commission issued 672 warnings to retailers suspected of unfair discounting in fiscal 1999, an increase of 12.2% from a year earlier and about 350% higher than the fiscal 1996 figure.

Liquor shops received 429 FTC warnings, or more than 60% of the total, a rise of 26.5% from fiscal 1998. Petroleum product retailers got 215 warnings, up 16.2%, reflecting the intensifying price competition in the industry since gasoline imports were liberalized in 1996.

According to the FTC, ''unfair discounting,'' which is prohibited under the Anti-Monopoly Law, is discounting which, if continued for a certain period of time, could cause financial harm to rival firms.

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