In retreat

Article Abstract:

Japanese government bonds and share prices did not respond well to the 1997 to 1998 budget which was released in Dec 1996. There is concern that tax increases and public spending cuts could hamper economic recovery and corporate profit growth. The Japanese budget deficit and government debt have grown following attempts to stimulate the economy through fiscal policy. The budget proposes a major rise in tax revenue. The banking industry could be hit if economic growth is modest, but Japanese interest rates are not likely to be raised in 1997.

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Trials and tribulations

Article Abstract:

The Japanese stock market is likely to be affected by the weakness of the Japanese yen, which in turn is affected by the performance of the economy as a whole. The Bank of Japan has sought to support the yen, and the government has announced a fiscal package to help boost the economy, but there are limits to fiscal policy due to levels of government debt. A drop in interest rates to boost the economy could lead to a further drop in the value of the yen.

Interest rates

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