24 May 2000

Despite increasing surpluses with its international trading partners, domestic retail sales in Japan declined for a record 37th consecutive month in April. The continuing fall is attributed to weak consumer spending – the fulcrum of Japan's economy, representing some 60% of total gross domestic product.

The Ministry of International Trade and Industry reported today that nationwide retail sales had fallen 3.4% year-on-year, virtually in line with market forecasts of 3.5%. Sales at larger stores, regarded as the bell-wether of changes in consumer spending, fell by 4.6% on a same-store basis. Additionally the food, drink, clothing and accessories sectors continued to lead the decline.

According to Tomoko Fujii, an economist at Nikko Salomon Smith Barney: "The key to a recovery of consumption is rises in workers' incomes." However, the government maintains that improvements in industrial output and profits will eventually translate into a rebound in personal consumption – without which Japan’s faltering economy cannot recover.

News source: Financial Times