Little Optimism In Japan

Japan’s economy will grow only 0.4 percent during the fiscal year ending next March, and stay flat in the following fiscal year, a private think tank forecast.

Nikko Research Center, a research unit of Nikko Securities Co., said a strong likelihood exists that the economy fell into recession in the April-June quarter of 1995 under the weight of the yen’s rise against other currencies and a slowdown in the U.S. economy.

The latest outlook is a downward revision from Nikko’s forecast three months ago. In March, Nikko said Japan’s gross domestic product would rise 1.3 percent in the current fiscal year and 1 percent in the next.

Nikko cited worsening business conditions for Japanese exporters such as the soaring yen, which makes Japanese products more expensive abroad, and the U.S. economic slowdown, which may dampen demand for Japanese goods.

Nikko also noted that a worsening labor market will erode consumer confidence, leading to further sluggishness in spending.