Japan's Economy Showing Signs of Improvement

Japan's prime minister says that the nation's economy is finally emerging from a prolonged slowdown thanks to rising corporate profits, investment and write-offs of bad bank loans.

"Japan's economy has strong underlying strength. It has potential energy," Prime Minister Junichiro Koizumi said in a nationally televised New Year's press conference. "Finally, we are starting to see some bright signs." Koizumi said Japan's economy has been performing above government expectations as banks have reduced bad loans and rising profits give companies more money to invest. He acknowledged that Japan's employment situation remains tough with unemployment at 5.2 percent - just below a record high - but noted that job offers are increasing.

Japan's economy has been struggling for more than a decade since the country's asset "bubble" - inflated by speculative spending on stocks and real estate - burst in the early 1990s.

Could this mean more Japanese business investment in the US in 2004? That is one possible implication. Another is that Japanese exports to the US will continue to grow this year. Watch the Japanese situation very closely this year. I think some interesting things are likely to happen, based upon my "reading of the tea leaves."

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