Japanese executives see slow economic recovery

Wednesday, January 06, 2010
TOKYO: Japan’s business leaders warned on Tuesday the economy was unlikely to recover until the second half of this year as the nation faces the threat of being overtaken by China as the world’s second largest economy.

“Unfortunately, the Japanese economy has yet to be on course to sustainable recovery,” Fujio Mitarai, chairman of Japan Business Federation, told a joint news conference after a New Year party with the nation’s top executives.

“The first half will remain severe as deflation is likely to continue for now,” said Mitarai, who is also chairman of Canon.

“But we are going to see signs of recovery globally in the second half,” he said. “I hope the economy will recover slowly in the second half.”

Tadashi Okamura, chairman of the Japan Chamber of Commerce and Industry, also predicted the economy “will slowly recover in the second half.”

But Masamutsu Sakurai, chairman of Japan Association of Corporate Executives, warned that it will take “a considerable time to get rid of deflation as it is a structural problem.”

Okamura said Japan should focus on building a technology-oriented economy, rather than aiming for all-round economic might.

“We have had an identity of the world’s second largest economy, but it is just a matter of time before we will soon be overtaken by China,” he said.

“We should aim at becoming the world number one in science and technology, which will solve problems of the 21st century.”

In late December, China said the country’s economy grew by 9.6 per cent in 2008, up from a previously announced figure of nine per cent, moving closer to overtaking Japan as the world’s second largest economy.

Japan returned to growth in the second quarter of 2009 after a severe year-long recession, but renewed deflation and weak domestic demand are major concerns for policymakers.