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Japanese GDP picking up

TOKYO: Top Japanese officials showed signs of rising confidence on Friday that the world's second largest economy is headed toward recovery, while the central bank vowed to keep supporting it with an ultra-easy monetary policy.

Finance Minister Kiichi Miyazawa said personal consumption was likely to improve during the first half of the year while corporate capital spending, the other key economic engine, would start growing around September.

Miyazawa had been relatively silent on the economy in recent weeks, although Economic Planning Minister Taichi Sakaiya said at mid-week that the finance minister seemed cautious about the recovery's outlook.

Miyazawa's comments also came amid widespread expectations that the economy technically slipped into recession in the latter half of last year by shrinking for a second consecutive quarter.

Personal consumption, which comprises 60 percent of the economy and will be key to driving any economic recovery, faltered late last year due to a slump in semi-annual bonus payments and concerns about the millennium computer bug, which deterred consumers from buying big-ticket items.

"We will get October-December (gross domestic product) data soon. Taking into account corporate restructuring, household spending was weak. I cannot expect much," Miyazawa told a parliamentary session on Friday.

"But Japan's economy has got over the worst and we shouldn't get too emotional," he said.

ECONOMY LIKELY DIPPED INTO RECESSION

A Reuters poll of 19 economists this week pointed to a 1.1 percent decline in the Japanese economy in the October-December period from the prior quarter, based on the median of estimates.

The forecasts for the contraction ranged from 0.2 percent to 1.9 percent.

The Economic Planning Agency (EPA) is due to announce GDP data in mid-March.

Sakaiya has recently sounded a more upbeat tone on the economy, saying he has become more confident about the prospects for a full-fledged recovery that will likely be under way around September.

The government is officially targeting GDP growth of 0.6 percent for the current fiscal year ending on March 31 and 1.0 percent for the following year.

Bank of Japan (BOJ) Governor Masaru Hayami reiterated on Friday the bank will maintain its unprecedented policy of guiding the key short-term interest rate to zero until deflationary fears ebb and a self-sustaining recovery is in place in the private sector.

Asked how long the BOJ will continue the year-old policy, Hayami told a parliamentary session: "We are considering this every day and night but there is no clear answer."

"But the BOJ will give the utmost support to the economy through its zero interest-rate policy," he added.

Hayami said it is difficult to gauge deflationary concerns by one indicator alone and the BOJ will closely watch movements in corporate capital spending and consumption as it deliberates on when to end the ultra-easy policy.-Reuters