（゜Д゜;）英字新聞
Time to strengthen growth potential
Japan's economy grew more than expected in the January-March period, but it is too early to be optimistic. The government must now take measures to strengthen growth potential while business conditions remain resilient.
Gross domestic product expanded at an annualized 3.3 percent in the first quarter from the previous three months, exceeding what is generally seen as the nation's potential growth rate--between 1.5 percent and 2 percent--for the second straight quarter.
The relatively strong growth was sustained by firm exports, with a decline in shipments to the United States made up for by a rapid increase in exports to Asia and other regions. Consumer spending increased more than expected, while housing investment has recovered from a slump caused by confusion over implementation of the revised Building Standards Law.
The growth rate proves the underlying strength of the Japanese economy. But figures for personal consumption and other items for the January-March period may have been exaggerated by the leap year, which made the period longer than usual. The figures cannot be taken at face value.
Meanwhile, economists point out many causes for concern regarding the future. The worldwide economic slowdown due to the U.S. subprime loan crisis, rising raw material prices and the appreciating yen are all putting increasing pressure on corporate earnings--long the engine of the Japanese economy.
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Companies showing caution
Companies on the Tokyo Stock Exchange are expected to see their first drop in profits in seven business years this fiscal year. Anticipating this decline, companies are showing caution over investment. The latest GDP figures show that corporate investment in equipment fell 0.9 percent from the October-December period--the first decrease in three quarters.
Exports from Japan to newly emerging countries in Asia and other regions might slow down if the economic downturn in the United States affects their economies. And slow sales of condominiums in Japan mean it is hard to see smooth recovery in the number of housing starts.
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Price hikes here to stay
There also is concern that soaring prices for gasoline, food and other daily necessities might crimp consumption.
Many economists believe that worldwide price hikes for natural resources and food will persist as they stem from structural problems such as increasing demand in emerging countries. This means Japan might experience soaring prices and an economic downturn.
Monetary and fiscal policy measures have only limited effect in stimulating business in Japan due to low interest rates and huge fiscal deficits. Add inflation to the mix and the government will face a real conundrum over economic policy.
Given these problems, the government must foster conditions under which corporations and individuals can independently step up their own economic activities.
Action items for the government include reinforcement of its economic partnership agreement strategy, intended to aid global expansion of Japanese firms, and reduction of effective corporate tax rates to improve competitiveness. The government also must quickly make clear how long it will take to rebuild the nation's social security system to ensure that the public feel secure enough to increase personal consumption.
It is time for not only the government and the ruling coalition parties but also the opposition parties, which have a majority in the House of Councillors, to work together and concentrate on realization of policy measures to strengthen the potential of the Japanese economy.
