Japan PM Koizumi reiterates confidence in economic recovery

Prime Minister Junichiro Koizumi, in a major policy speech to parliament, repeated that Japan’s economic recovery is intact, although recent data shows it might be slowing.

‘As we push for structural reforms, the economy is steadily recovering with the private sector taking the initiative, while personal consumption and capital spending are improving,’ Koizumi said in a speech on the first day of a 53-day extraordinary session.

Koizumi stressed that small- to mid-sized businesses and regional economies still need help to benefit from the recent economic upswing, seen mainly among major firms.

The government has issued subsidies to local communities and eased visa requirements for foreign visitors in a bid to achieve the government’s goal of boosting annual tourists to Japan to 10 mln by 2010, Koizumi said.

He also said the government will continue to push banks to cut their non-performing loans to healthy levels, and will introduce as planned next April a ceiling of 10 mln yen per account on the amount guaranteed in the event that a bank fails. Currently the Japanese government guarantees the full amount, without limit.

Concern over the imposition of a ceiling has dissipated over the past year due to Japan’s economic recovery and improved health of most of its largest banks.

Koizumi said his reform agenda has come to a ‘crucial juncture’.

‘Privatization of postal services… is the core of my reform drive,’ Koizumi, in office since April 2001, told the Diet.

The government aims to divide Japan Post into four entities at the start of a privatization process to begin in April 2007.

The government aims to revitalize the economy by allowing private carriers and financial institutions to compete in huge markets now dominated by Japan Post.

The Japan Post privatization plan was approved by the cabinet last month despite opposition from within the ruling Liberal Democratic Party, which depends on votes from postal workers.