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Japan's Economic Forecast Downgraded but Remains Positive

The Bank of Japan is now expecting its economy to shrink 3.4 percent, higher than its previous forecast of 3.1 percent, "in the 12 months to 31 March 2010".

This is a tremendous improvement from the contraction of 12.7 percent during the October to December 2008 period. The central bank affirms that "Japan's economic conditions have stopped worsening". The Japanese economy, whose growth heavily relies on exports of automobiles and electronics, has suffered in the past year. The falling global demand for the products has caused the economy to weaken. However, second quarter reports show that both exports and industrial production, which increased by 5.7 percent in this past May, have started to improve. They expect a recovery in the third and fourth quarter of 2009. Analysts agree with the expectation of the country's recovery: "They are definitely correct when they say the economy overall has stopped worsening," said Nikhilesh Bhattacharyya of Moody's Economy.

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Japan's Economic Forecast Downgraded but Remains Positive

The Bank of Japan is now expecting its economy to shrink 3.4 percent, higher than its previous forecast of 3.1 percent, "in the 12 months to 31 March 2010".

This is a tremendous improvement from the contraction of 12.7 percent during the October to December 2008 period. The central bank affirms that "Japan's economic conditions have stopped worsening". The Japanese economy, whose growth heavily relies on exports of automobiles and electronics, has suffered in the past year. The falling global demand for the products has caused the economy to weaken. However, second quarter reports show that both exports and industrial production, which increased by 5.7 percent in this past May, have started to improve. They expect a recovery in the third and fourth quarter of 2009. Analysts agree with the expectation of the country's recovery: "They are definitely correct when they say the economy overall has stopped worsening," said Nikhilesh Bhattacharyya of Moody's Economy.

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Japan Tankan Signals Business Spending Cuts May Impede Recovery

The Bank of Japan's quarterly Tankan report reflected businesses plans to further reduce spending, since it is estimated that profits will fall 20 percent this year, which is almost twice the March forecast.

Hiroshi Shiraishi, an economist at BNP Paribas in Tokyo said, "Companies have started to realize that sales aren't really going to come back, companies are faced with massive excesses in capacity." Hiromichi Shirakawa, chief economist at Credit Suisse Group AG in Tokyo said, "It could be two or three years before companies are using even three quarters of their production capacity." Aware of this, managers are cutting investment, jobs and wages. Toyota, for instance, is cutting spending 36 percent and is simultaneously cutting wages for factory workers by 15 percent. As profits continue falling, companies will continue to hire less workers (and lay some off) and invest less.

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Bank of Japan's Tankan Survey Looks Better

It is predicted that the Bank of Japan's Tankan survey on June 1st will show that important manufacturing companies believe the "worst of the recession" is over.

It is predicted that the Bank of Japan's Tankan survey on June 1st will show that important manufacturing companies believe the "worst of the recession" is over on July 1, 2009. Evidence of the new outlook among large makers of electronics and cars is expected to rise from minus 58 in March to minus 43. Although the minus shows that pessimists outnumber optimists, the decrease in number of pessimists is important, especially in the manufacturing industry. As Jan Lambregts, head of financial markets research at Rabobank International in Hong Kong said, "we're seeing a rebound from rock bottom." A large increase in Chinese demand has helped Japan. Thanks to China's government spending, Japan's "heavy equipment" autos and materials have increased in sales. For instance, in China, Nissan sales rose 37 percent in April 20009, due to a subsidy that cut the consumption tax in half on small cars. In the U.S, Mazda Motor Corporations are also predicted to increase because of the Obama administration's "cash for clunkers" which would give consumers some money for trading in their old vehicles. (As much as $4,500 according to Bloomberg.) In Japan, electronics sales have increased 18 percent in the past month, due to the government's introduction of a program to advocate consumers to purchase eco-friendly products.

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Goldman Sachs recommends Japanese Banks

Goldman Sachs Group Inc. said it recommends buying Japanese banks and shorting the nation's steelmakers, citing valuations. Japanese bank stocks are relatively cheap as they trade at about 70 percent of their average price-to-book ratio, compared with up to 120 percent for banks across Asia, Kathy Matsui, the Tokyo-based chief strategist at the brokerage, said in a report dated yesterday. The country's steel shares are at or above their midpoint price-to-book levels, the report said.

Goldman Sachs Group Inc. said it recommends buying Japanese banks and shorting the nation's steelmakers, citing valuations. Japanese bank stocks are relatively cheap as they trade at about 70 percent of their average price-to-book ratio, compared with up to 120 percent for banks across Asia, Kathy Matsui, the Tokyo-based chief strategist at the brokerage, said in a report dated yesterday. The country's steel shares are at or above their midpoint price-to-book levels, the report said. "Japanese banks should enjoy an outsized earnings impact from lower credit costs as the economy stabilizes," Matsui wrote. "The recovery in stock prices should also help alleviate capital concerns." While many investors have bought into steel stocks that are sensitive to global economic trends, most are still "extremely underweight" in domestic cyclical shares like banks, Matsui said in the report. The brokerage boosted Mitsubishi UFJ Financial Group Inc. to "buy" from "sell" and Mizuho Financial Group Inc. to "neutral" from "sell," the report showed. Mitsubishi UFJ rallied 2.2 percent to 605 yen while Mizuho gained 2.1 percent to 246 yen as of the 11 a.m. trading break on the Tokyo Stock Exchange.

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Japan Limits Exports to North Korea while China Prepares to Act

Japan has banned exports to North Korea in response to their nuclear and missile tests in May, with the purpose of sending a "strong message".

Japan has banned exports to North Korea in response to their nuclear and missile tests in May, with the purpose of sending a "strong message". "What's most important is that North Korea make the right response... to Japan's strong message, even though there are people who point out the volume of exports is small," said Chief Cabinet Secretary Takeo Kawamura. The Japanese concern arises from the proximity of the country, since much of its territory could be hit by North Korean mid-range missiles, according to the BBC's Roland Buerk in Tokyo. North Korea's key trading partner is China. China "has pledged to implement tougher sanctions against North Korea, which were approved by the UN last week." These sanctions include careful inspection of ships suspected of taking banned cargo to and from North Korea, and increased ban on arms sales.

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Japan Stocks Shows Optimism

Japan's stock index closed Friday above the important 10,000-point level since October 7, 2008.

Japan's stock index closed Friday above the important 10,000-point level since October 7, 2008. "Investors are upbeat over the direction of the economy with recent indicators suggesting the global economy is heading toward a recovery," said Yutaka Miura, senior strategist at Mizuho Securities Co. Ltd.

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Distressed Japanese Work to Death

Analysts say that people facing an unpredictable economic future usually feel compelled to work longer hours, even if it is hazardous to their health. Although the Japanese culture of hard work is widely praised, it also poses a threat to those that overwork.

Analysts say that people facing an unpredictable economic future usually feel compelled to work longer hours, even if it is hazardous to their health. Although the Japanese culture of hard work is widely praised, it also poses a threat to those that overwork. According to a report released by the Health, Labor & Health Ministry on June 8, "a record number of workers suffering from job-induced mental disorders successfully filed for compensation". About 269 of 927 of applicants won compensation and among those 269 applicants, 66 had sought suicide, which is the second-highest number on record. In addition, about 158 deaths of workers were linked to karoshi, or working to death, which was an increase of 16 in just one year. Companies like Toyota are working to improve conditions by encouraging workers to rest and take vacations. During Golden Week holidays in May, for example, some manufacturers closed plants for longer and advocated the holidays. However, the economic hardships are still persistent. Many manufacturing workers have had to surrender to wage cuts, bonuses and overtime, which one worker said takes about $1,000 a month out of his pocket. Japan's positive second quarter forecast of growth in GDP might lessen the stress Japanese workers are currently facing.

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Yen Rose Against 14 of 16 Currencies

The yen rose against euro and dollar and showed signs of strength, also the yen grew on top of 14 of 16 currencies.

The dollar earlier approached a one-week high against the euro as traders added to bets the Federal Reserve will increase its target lending rate this year as the world's largest economy recovers. Paul Krugman, Nobel Prize-winning economist, said that American economy will recover from the crisis by September. "I would not be surprised if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer," Krugman added "Things seem to be getting worse more slowly. There's some reason to think that we're stabilizing."

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Japan's current account drops but maintains its balance

Japan continues to suffer amid the global downturn.

Its current account surplus fell in April by 55% compared to the same month in 2008. However, the rate of decline in exports has been slowing and according to Norio Miyagawa, an economist at Shinko Research Institute, it is likely that Japan may be able to maintain a positive trade balance for the time being.

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Japan Suffers First Trade Deficit Since 1980

apan's trade balance for fiscal 2008 suffered its first annual deficit in nearly three decades, data released Wednesday showed, underscoring the difficulty facing the export-reliant country in its attempt to get out of recession. The result also highlights how vulnerable the world's second largest economy is to the sharp slowdown in global trade triggered by the U.S.-originated financial crisis.

apan's trade balance for fiscal 2008 suffered its first annual deficit in nearly three decades, data released Wednesday showed, underscoring the difficulty facing the export-reliant country in its attempt to get out of recession. The result also highlights how vulnerable the world's second largest economy is to the sharp slowdown in global trade triggered by the U.S.-originated financial crisis.

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