Japan Addresses Challenges to Future Growth and Development

New York, New York - June 29, 2006 - The Japan External Trade Organization (JETRO) released a newsletter today highlighting challenges to Japan's future growth and development. It can be viewed at:

http:///www.jetro.org/focus

A summary is presented below:

• Recent Data Indicates Japan is Maintaining its Strong Performance

In the first quarter of 2006, Japan's GDP increased by an unexpectedly high 0.5%. This equaled an annualized rate of 1.9%, twice the rate analysts had expected. Japan's solid performance led the Governor of the Bank of Japan (BOJ) Toshihiko Fukui to comment, "we think there will be a long-lasting recovery".

• Japanese Demographic Trends Present Both Challenges and Opportunities

The Japanese government estimates that Japan's population -- currently estimated at approximately 128 million people -- will fall to roughly 120 million by 2025 and 100 million by 2050. It is also believed Japan will have the world's second largest percentage of people aged 65 and over by 2050.

• Economic Growth Will Require Changes in Fiscal and Monetary Policy Orientation

During the 1990s, the Japanese government committed large amounts of capital to public works projects and other initiatives to stimulate economic growth and to temper the pain resulting from economic restructuring and rationalization. While this brought various benefits and helped to ease this transition, Japan's fiscal stimulus policy also produced record levels of public indebtedness.

Japan's post-war economic model emphasized business expansion, controlled competition and the acquisition of ever-larger global market share rather than profit maximization and efficiency. At the level of the individual employee, it stressed lifetime employment, loyalty to ones employer, and promotion on the basis of seniority rather than individual initiative and drive.

• Japan Can Now Attend to Remaining Challenges to Further Enhance Growth and Momentum

Japan's ability in recent years to address its most urgent problems now allows business and government leaders to identify additional challenges in an effort to accentuate the progress that has been achieved. By confronting obstacles such as those outlined above, Japan is seeking to further enhance efficiency and to implement the measures and to maintain the social consensus necessary to make Japan an even more attractive business and investment environment.

To view the full contents of this newsletter please visit:
http://www.jetro.org/focus

Data, statistics and the reference materials presented within this newsletter have been compiled by JETRO from publicly- released media and research accounts. Although these statements are believed to be reliable, JETRO does not guarantee their accuracy, and any such information should be checked independently by the reader before they are used to make any business or investment decision.

For additional information on economic and financial trends in Japan, please contact:

JETRO New York
Akihiro Tada
Executive Director
email: akihiro_tada@jetro.go.jp
tel./fax +1-212-997-0416/+1-212-997-0464

This material is published and disseminated by JETRO New York, in coordination with KWR International, Inc., New York, NY 10016, Tel: 212-532-3005, Fax: 212-685-2413, E-mail: kwrintl@kwrintl.com. JETRO New York is registered as an agent of the Japan External Trade Organization, Tokyo, Japan and KWR International, Inc. is registered on behalf of JETRO New York. This material is filed with the Department of Justice where the required registration statement is available for public viewing.