Japan fears U.S. economic slowdown

[Ulhas Joglekar]

27 November 1999
Japan fears U.S. economic slowdown
Tokyo: Asia's recent economic upswing has been largely fueled by exports to
America, and a U.S. economic downturn could send the region plummeting back
into recession, the Japanese government said today.
Asia must wean itself off exports to the United States to ensure a stable
recovery, the government's Economic Planning Agency said in its annual
report on the world economy.
Many Asian economies, including Japan, have slowly been emerging from their
worst recession in decades. Robust U.S. demand for their goods deserves much
of the credit, the report said. But America won't be able to continue its
level of imports of Asian products forever, it warned.
The EPA said that U.S. stocks have recently been overvalued by as much as 55
percent. Many of the factors behind U.S. economic growth, such as low
inflation and rising labor productivity, have started to fade, it said.
There is ``more than a slim chance of (U.S.) stock prices declining
sharply,'' the EPA said in its report. ``If stock prices were to fall
sharply, the effect ... on overseas markets would be serious.''
The report said rising oil prices have raised fears of inflation in the
United States, a threat the Federal Reserve has sought to counter by raising
interest rates.
Despite the EPA's cautionary tone, it remained generally optimistic about
Asia's short-term prospects.
It cited International Monetary Fund predictions that Japan's economy would
grow 1 percent in the fiscal year through March 31, and that the economies
of the Association of Southeast Asian Nations - among the worst hit by the
regional financial crisis - would expand 1.4 percent. (AP)

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