Booming Recession

For the past year Japanese businessmen have woefully claimed that they are in the throes of recession. But to anyone else, Japan's condition sounds more like a boom. Gleaming new buildings are rising in every major Japanese city and more new cars join the Tokyo traffic jam every day. Consumer income in Japan is up 10% from last year, consumer spending up 9%, and even industrial output, which in any other country must point down or there is no recession, is up 6%.

To the Japanese, this has been a crisis year nonetheless, because the gross national product, which a year earlier soared a dizzying 18.9%, has climbed only 4.8%.

This slowdown came about because of a government effort to put the brakes on Japan's runaway economic expansion.

Such steps had to be taken because last year Japanese industry--carried away by Prime Minister Hayato Ikeda's plan to double per capita income in a decade--launched into an orgy of expansion. Imports of heavy machinery became so great that ships had to wait as long as 30 days to unload, and Japan's trade deficit jumped to a record $1.5 billion. Determined to get the nation's balance of payments back on even keel, Ikeda raised interest rates, put curbs on imports, and mounted a drive to increase exports.

The measures worked. Although imports stayed at high levels, exports rose so much that the trade balance is back in the black this year. Stepped up U.S. buying of textiles, raw silk, steel, turbines and transistor TV sets cut Japan's trade deficit with the U.S. in the first nine months of 1962 by 50%; in September, for the first time in history, Japan actually sold more goods in the U.S. than it bought there.

Last week Ikeda's government decided the reins could safely be loosened a little, lowered the official bank interest rate by 0.3% to 6.57%--back to where it was before the clampdown. Japanese businessmen were delighted, but they still managed to pull a poor mouth. Says Fuji Steel President Shigeo Nagano: "I would like to see the government now embark on a general relaxation of financial curbs, otherwise it is going to be a long, slow climb back to prosperity''--Japanese style, that is.

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