2% economic growth seen in '07
Leaders of Japan's three major business lobbies were upbeat
Friday about the country's economic prospects for 2007,
saying the economy is likely to grow 2 percent this year
on the back of a strong recovery in the business sector.
"The first half of the year may be slow due to a slowdown
in the U.S. economy, but the latter half will be better,"
said Fujio Mitarai, head of the Japan Business Federation
(Nippon Keidanren). "Japan can achieve a growth rate
of about 2 percent."
Mitarai also said the 225-issue Nikkei stock average may
top 20,000 by the end of the year, reflecting Japan's brisk
economy.
On Friday, the Nikkei average closed at 17,091.59 yen,
down 262.08 points from a day earlier.
Mitarai, who is also chairman of Canon Inc., and two other
business leaders, Kakutaro Kitashiro, chairman of the Japan
Association of Corporate Executives (Keizai Doyukai), and
Nobuo Yamaguchi, chairman of the Japan Chamber of Commerce
and Industry, spoke at a news conference at a Tokyo hotel
following a year-opening party organized by the three groups.
However, the three business leaders also voiced concerns
about higher prices for raw materials, including oil, and
the potential for a weaker U.S. economy to act as a drag
on Japan.
Speaking at the event, Prime Minister Shinzo Abe hinted
that since businesses are enjoying higher earnings, they
should share more of the fruits of their success with workers.
"This year, I would like the people to feel the economic
recovery," Abe said in his speech. "I ask the
three groups to cooperate with us so that the economic recovery
will spread into the household (sector)."
Despite the continuing economic expansion, consumer spending
remains weak because workers' wages have not risen in tandem
with corporate profits.
However, Keizai Doyukai's Kitashiro said at the news conference
that it is up to each company to decide the wage levels
of its employees.
The three business leaders urged the government to promote
fiscal reform to repair the country's tattered finances.
Kitashiro said Abe should propose a detailed plan with
a time frame for fiscal reform to ensure sustainable economic
growth.
Commenting on a possible interest rate increase by the
Bank of Japan, Yamaguchi said a rate hike will negatively
affect small and midsize firms.
He said the BOJ should thoroughly explain to the public
that the rate will still be low even if it is raised.
"The BOJ should emphasize that a rate increase is
not due to inflation and that it will maintain its easy-money
policy," Yamaguchi said.
Speculation is rife that the BOJ may raise the interest
rate in its Jan. 17-18 Policy Board meeting.
2%
economic growth seen in '07