Japan's weak economy hits home

Unlike American consumers who are pressured by credit-card debt or losses from investments made in the dotcom stock boom, the Ohiras's problems don't have an obvious cause. In contrast to Japanese who bought property in the late-1980s "bubble" and then saw values fall by 80 percent, they managed to prosper all through the last decade of Japan's economic slump.

Japanese say things are bad and they can feel them getting worse. An Asahi newspaper survey found that more Japanese feel "economic pain" in their daily lives now than ever before.

Japan's jobless rate stands at a record 5.5 percent, meaning 3.5 million are out of work, including 1 million heads of households. Personal bankruptcies, the number of homeless, reports of domestic violence, suicides - all are at record highs.

But a glimmer of hope flickered over the weekend when Koizumi and Singapore's Prime Minister Goh Chok Tong signed a free-trade pact that is expected to remove tariffs on almost all goods traded between the two countries.

Koizumi said in a speech yesterday that the reason Japan's economy has stagnated is that "Japan's previous success had made us complacent," but that reforms were under way to restore financial growth. "I believe the Japanese economy will pick up for sure with the reform so that we can be a locomotive engine again for the regional economy," Koizumi said.

Japan's move was an apparent bid to catch up with Beijing's financial maneuvering.

In November, Japan was left out in the cold when China and the 10-member Association of Southeast Asian Nations agreed to create the world's most-populous free-trade bloc within 10 years, covering 2 billion consumers.

Kyoto, as a city, too, may be better off than many others. Computer company Kyocera, video game maker Nintendo, and Murata Manufacturing are growing, a high-tech business park with 130 businesses is expanding, and the city's universities and research centers remain, despite the nationwide slump. Terrorist attacks overseas have Japanese tourists returning to take another look at Kyoto's temples and gardens, adding at least a temporary boost.

But downsizing and worry about the future is hurting even more. Closure of a Nissan Motor factory in Kyoto and the collapse of a local retailer cut thousands of jobs.

A New Year's survey of local companies by Kyoto's main newspaper found 72 percent expect 2002 to be worse.

Indeed, even the Ohiras - both college graduates who saw their finances improve generally every year since 1971, when they got married and took their last overseas vacation - are worried.

"I don't know what will happen this year, but it's not going to be good," Ohira says.

Material from wire services was used in this report.

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