Worst is over, EPA chief believes

The director general of the Economic Planning Agency suggested Friday that the economy may be growing, given that the economic cycle appears to have passed through its worst phase last year.

“It seems that we passed the trough (of the economic cycle) sometime before May last year,” Taichi Sakaiya told a news conference.

“It is high time for us to convene a meeting of the economic experts commissioned to examine the readings of a series of diffusion indexes,” he said.

Diffusion indexes — three sets of leading, coincident and lagging indicators — are closely monitored as key gauges to measure the current state of the economy and to forecast its possible future course.

The indexes are also used to determine whether the economy of a nation is actually showing upward or downward movement.

Sakaiya said he will have the EPA-commissioned study group determine exactly when the economy went through its lowest point.

But Sakaiya cautioned, “The duty of the commission will be merely to determine the timing of the passage through the trough, and the convening of the committee will not be tantamount to declaring that the economy has recovered.”

The economy’s transition to a full-fledged recovery phase depends on whether personal consumption and corporate capital outlays for new equipment and factories have revived sufficiently, he suggested.

Japan’s economy shrank a real 1.4 percent in the October-December quarter of 1999, contracting for the second consecutive quarter, the EPA said last month.