By John Letzing, MarketWatch
SAN FRANCISCO (MarketWatch) — Panelists at an economic forum agreed that Japan’s economy will worsen through next year, as benefits from the government stimulus program fade, and as the U.S. economy continues to languish, according to a report Wednesday.
Barclays Capital Japan Ltd.’s head of Japanese economic research, Tetsufumi Yamakawa, said at the forum Tuesday that while some stimulus measures will prop up the Japanese economy through fiscal 2010, they will “peter out” over the next fiscal year, the Nikkei business daily reported. Japan’s current fiscal year ends March 31, 2011.
“Prime Minister Naoto Kan’s administration is stressing employment but has a strong tendency to ignore big business and the market, so it’s doubtful whether it will come up with effective plans,” Yamakawa said, according to the report.
Panelists at the forum — sponsored by Nikkei Inc. and the Japan Center for Economic Research — also included Sharp Corp. (JP:6753 830.00, -5.00, -0.60%) (SHAR 0.00, +0.00, +50.00%) Chairman Katsuhiko Machida and Mizuho Research Institute chief economist Atsushi Nakajima.
Nakajima said that while the U.S. is recovering gradually, the country still has excessive household debt, “a major cause behind the financial crisis,” according to the report.
Yamakawa added that if midterm elections in the U.S. “result in a deadlocked House and Senate,” further stimulus measures would become difficult.
The comments came as the Bank of Japan cut its policy interest rate in a surprise move, citing a weakening economic recovery. See report on Japan’s rate cut.
