text: Government officials said the worst may be over for the Japanese economy after todays news of stronger than expected growth in the January/March period. But private economists were not so sure and said the economy was unlikely to achieve the governments 3.5 pct growth forecast in the current fiscal year ending next March. As already reported GNP rose 1.2 pct in the January/March quarter after a revised 0.7 pct increase in the previous three months. For the fiscal year that ended last March 31 GNP growth slowed to 2.6 pct from 4.3 pct in 1985/86. The government economists acknowledged that the improved export performance in the January/March quarter was unlikely to be repeated. The volume of exports during the period was up two pct from the previous three months. The yens rise in April to about 140 to the dollar from 150 probably resulted in a fall in exports in the April/June quarter they said. However given the yens recent stability stepped-up domestic demand should work as a driving force to push the economy onto a path of sustainable growth they said. Many private economists though doubt that the economy will achieve the governments 3.5 pct growth forecast for the 1987/88 year. Growth in 1986/87 also fell short of the governments forecast which was revised downwards to three pct last December from an original four pct. Domestic demand as a whole is not strong enough except for housing said Johsen Takahashi chief economist at Mitsubishi Research Institute. Consumer spending is likely to remain weak as the growth in nominal income stays low he added. The rise in consumer spending in the January-March quarter was simply a reflection of the contraction that occurred in the preceding three months Takahashi said. Private capital spending in the quarter looked strong but this was primarily because utility companies brought forward their 1987/88 capital investment plans into the final quarter of 1986/87 in line with the governments economic stimulation package announced last fall he said. Dai-Ichi Kangyo Bank chief economist Kosaku Furuta said he was unable to say the economy has bottomed out but added he expects increasing signs of recovery in the coming months. Destocking is coming to an end and companies are starting to rebuild inventories Furuta said. Housing is expected to remain buoyant backed up by lower interest rates as well as government policies to stimulate the sector he said. The governments recently unveiled 6000 billion yen economic package will also help the economy. But he said that the economy was unlikely to achieve the governments 3.5 pct forecast for 1987/88 although growth might come close to three pct. REUTER
target: JAPAN OFFICIALS SAY WORST MAY BE OVER FOR ECONOMY