Gov't declares Japan's longest postwar boom ended in Oct. 2007+

TOKYO, Jan. 29 Kyodo - The government announced Thursday that Japan's longest postwar economic boom ended in October 2007 and that the nation has been in recession since then, determining that the latest expansion lasted for 69 months.

A panel of experts in the Cabinet Office confirmed that economic activity in
Japan reached its peak more than a year ago, after the U.S. subprime mortgage
crisis broke out in August 2007 and surging crude oil prices began to
negatively affect the country's economy.
The uninterrupted period of growth since February 2002 was 12 months longer
than the previous longest postwar boom in the late 1960s known as the ''Izanagi
boom,'' which lasted 57 months between November 1965 and July 1970.
The panel chairman Hiroshi Yoshikawa, a professor in the Graduate School of
Economics at the University of Tokyo, told a news conference that the longest
period of expansion was led by Japan's robust exports and corporate capital
spending, but that households did not fully enjoy the fruits of the boom due to
slow wage growth.
''Compared with the past economic booms, exports made a significant
contribution to the latest phase of expansion, while consumption helped the
economy grow only a little,'' Yoshikawa said.
The professor said he personally believes that private consumption remained
sluggish during the last economic boom because the government failed to show
consumers a long-term fiscal structure to cover ballooning social security
costs in rapidly aging Japan, discouraging spending.
Critics say wage growth was capped during the latest expansion phase as many
firms prioritized dividend payments to shareholders. Soaring commodity prices
in the latter part of the boom are also thought to have dampened personal
spending.
Yoshikawa also said that during the current recession, which has so far lasted
14 months, the Japanese economy worsened at a relatively slow pace in the
beginning, but that the deepening global financial crisis and a slowdown in
emerging economies later caused steep declines in economic activity.
The panel chairman said that Japan has ''much homework'' to do to transform
from an export-dependent economic structure to an economy led by firm domestic
demand.
Kazumasa Iwata, president of the Economic and Social Research Institute in the
Cabinet Office, said the speed of recent drops in exports and production is
almost the same as that after the burst in the early 1990s of Japan's
asset-inflated bubble economy.
Japan's longest postwar recession lasted for 36 months between February 1980
and February 1983 following the second oil shock.
Iwata, a former Bank of Japan deputy governor, said he expects recent plunges
in crude oil prices to have a positive effect on the nation's economy in the
latter half of 2009. Since the ongoing crisis is affecting the global economy,
appropriate policy responses among major economies will be necessary, he added.
The panel of experts, which meets roughly every six months, analyzes turning
points in economic activity between troughs and peaks and officially confirms a
period of economic expansion about one year after activity is deemed to have
reached its peak.
The peak is finally decided when an economic boom-bust cycle is confirmed to
have ended. The timing for the latest peak will be formally fixed when the
current recession is considered to be over.
The U.S. National Bureau of Economic Research has acknowledged that the world's
biggest economy entered recession in December 2007.
==Kyodo
2009-01-29 22:06:15