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Global recession to hit Japan: PM

By Anil K Joseph
October 21, 2008 10:32 IST
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Fearing the "inevitable" global recession following the US financial meltdown, Japanese Prime Minister Taro Aso said the magnitude of the turmoil was increasing in "seriousness" and wanted the international community to make "concerted efforts" to tackle the crisis.

"The financial turmoil arising from the sub-prime loan issue in US August 2007 is increasing in seriousness. I recognise that financial crisis triggered by the bankruptcy of Lehman Brothers could lead to a global recession.

"Although the impact of this financial crisis on Japanese financial institutes has been limited so far, it seems inevitable that the slowdown of international economy will have an influence on the Japanese economy as well," Aso told PTI in an e-mail interview.

He noted that on October 10, leaders of the G8 countries, including Japan, had issued a statement which declared their determination to fulfill their responsibility in restoring confidence in the international finance system, and emphasised the importance of cooperating with emerging economies including India.

Again, last weekend, US President George W Bush has proposed that he would host a summit meeting in order to keep the financial crisis from happening again.

"I support President Bush's proposal," Aso said. "Japan, as the Chair of the G8 Summit this year and a country with experience of overcoming financial crisis, would like to play a central role in the meeting.

"I hope, through these concerted efforts of the international community, the world economy will get stabilized and become prosperous again.

Turning to the steps taken by his government to revive the Japanese economy, the world's second largest after the United States, Aso said Japan has opted for a supplementary budget amounting to 1,800 billion yen.

"This aims at assisting people who are directly affected by price rise and recession, agricultural sector, small and medium enterprises, and people who are concerned about their employment and medical care.

Further, to shield the general public's daily lives from the present financial crisis, Aso said he would formulate a three-pronged strategy.

The new policy would target the general public, financial measures and vitalisation of small and medium enterprises and provincial areas, he said.

Aso claimed that Japan had "adequate experience and know-how to deal with stabilisation of the financial system in the wake of the collapse of its economic bubble, which I would like to share with the international community at various fora, in order to contribute to the stabilisation of the world economy."

Aso's remarks came as his Cabinet office said in a report that Japan's economy has weakened further. The government has downgraded six components of the assessment, the most since April 1998, including exports, industrial production and consumer spending.

Even before the global financial turmoil caused Japanese stocks to plunge 20 per cent this month, reports for August showed factory output, machine orders and household spending all slumped.

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