Annual Report on the Japanese

Economy and Public Finance


- No Gains Without Reforms III -

October 2003

Cabinet Office

Government of Japan

[Annual List

Annual Report on the Japanese Economy and Public Finance 2002-2003


Chapter 1 Prospects for Economic Recovery

   Section 1 Present State of Economy and Positive Signs

      1. Economic Trend After the Bottoming Out

      2. Positive Signs in Business Sector

      3. Changes in the Severe Employment Situation

      4. Households Showing Firmness

   Section 2 Causes of Deflation and Challenges to Overcome It

      1. Causes of asset deflation and challenges to overcome it

      2. Current State of General Price Deflation

   Section 3 Developments of Fiscal and Monetary Policy

      1. Macroeconomic Impact of Fiscal Policy

      2. Effects of Quantitative Easing

   Section 4 Economic Outlook

      1. Main Scenario for Economic Recovery

      2. Risks in Main Scenario and Vulnerability of Economic Recovery

      3. Obstacles to Autonomous Recovery

Chapter 2 Rebuilding Finance and Enterprises

   Section 1 Problems Facing Financial and Other Companies

      1. Declining Function of Indirect Finance

      2. Effects on Business Investment

      3. Effects on SMEs

   Section 2 Rebuilding Finance

      1. Importance of Non-performing Loan Disposal

      2. Present State of NPL Disposal and Relevant Problems

      3. Financial Incentive Structure

      4. Rebuilding Finance

   Section 3 Rebuilding Enterprises

      1. Challenges Facing Business Sector

      2. Restructuring Excessively Indebted Firms

      3. Corporate Restructuring Using Public Frameworks

      4. Improvement of Enterprise Value and M&A

      5. Rebuilding Business Sector

   Section 4 Impact of Structuring Adjustment on Employment and Wages

      1. Adjustment Pressures on Employment

      2. Adjustment Pressures on Wages

      3. Desirable Employment Policy

Chapter 3 Addressing Aging and Declining Population

   Section 1 Meaning of Aging and Declining Population

      1. Progress in Aging and Declining Population

      2. Background to Aging and Declining Population

      3. Is a Birthrate Upturn Possible?

      4. Encouraging Women and Elderly People to Work

   Section 2 Prospects for Economic Growth under Aging and Declining Population

      1. Past Record of Japan's Economic Growth

      2. Economic Growth under Aging and Declining Population

      3. Economic Growth Simulation Using Macroeconomic Models

   Section 3 Building Public Sector that Match Aging and Declining Population

      1. Growing National Burdens and Challenges Facing Public Sector

      2. New Public Management (NPM) and Administrative and Public Finance Organization Reform in Japan

      3. Reform of the Public Pension System

      4. Reform of the Health Care System

      5. Reforming the Social Security System Taking Into Consideration Its Integrated Nature and Mutual Relationship


Appended Figures and Tables

Appended Notes

Reference Materials

Long-term Economic Statistics

[Annual List