The Japanese economy is now out of the worst phase of the recession. But the process of achieving recovery and even- tual prosperity has not been entirely smooth. First, we cannot yet claim that firms in various industrial sectors have earnestly initiated their restructuring with real zest. Second, fiscal expenditures have been declining since last April, reducing the real GDP growth rate again.
The Japanese government has been euphoric since it discovered that in the January-March quarter of this year the real GDP growth rate rose to 1.9 percent (and an annualized rate of 7.9 percent). As a result of this euphoria, the government failed to propose any significant antirecession measures in the June-August special session of the Diet.
Yet Prime Minister Keizo Obuchi pledged to U.S. President Bill Clinton and other members of the G7 last June that his administration would definitely attain its announced target of 0.5 percent growth in real terms in the 1999 fiscal year. Therefore, it is quite likely that the government will make desperate efforts to pass its "supplementary emergency budget" for another round of public works this fall.