Bush says Japan reforms vital, Koizumi vows action

Bush says Japan reforms vital, Koizumi vows action

Reuters
Tokyo

U.S. President George W. Bush said on Monday he saw signs of a
recovery in the U.S. economy and expressed his support for
Japan's structural reform policy, saying Japanese growth was
vital for the world economy.

Prime Minister Junichiro Koizumi, for his part, vowed after a
meeting with Bush to overcome Japan's crisis of confidence and
get the world's second largest economy back on track.

Bush said he and Koizumi had discussed economic, security and
environmental issues that were vital to global stability.

"I told him that our economy is still in recession but that
there are some hopeful signs that we are recovering," Bush told a
joint news conference with Koizumi.

"There are some signs that the tax relief plan that we put in
place is having a positive effect so that we are beginning to see
some growth," Bush said.

Koizumi said he was making steady progress on reforms, but
said he felt Japan had suffered a loss of self-confidence.

"Ten years ago we were over-confident," Koizumi said,
referring to the era when Bush's father visited Japan as
president. "Now we've lost confidence. But I would like to tackle
structural reform with confidence and with hope."

Bush reiterated his support for Koizumi's reform agenda,
saying structural reform was not an easy task but that he was
confident Koizumi would push it through.

"I'm confident in this man's leadership ability, I'm confident
in his strategy, and I'm confident in his desire to implement
that strategy," Bush said.

"When he implements the strategy, it will help Japan's economy
a lot. And that's important, important not only for our bilateral
relationship it is important for the world's second largest
economy to grow," he said.

"It will help the region and it will help the world."

Bush said Koizumi had briefed him on a wide range of policy
steps, from the banking sector problems to deregulation.

"In our private discussion he said 'I want to make it very
clear to you exactly what I intend to do.' And he talked about
non-performing loans, the devaluation issue and regulatory
reform. And he placed an equal emphasis on all three," Bush said.

The yen dipped briefly after Bush caused some consternation in
the foreign exchange markets by referring to "devaluation".

A U.S. official, asked about the reference to "devaluation",
said: "What they talked about in the meeting was deflation."

Generally, however, the markets had little reaction to the
meeting. The Nikkei stock average closed 0.45 percent higher, and
Japanese government bond prices were little changed.

The yen was unchanged on the day around 132.60 to the dollar.

There are growing concerns at home and abroad that Koizumi's
initial election pledges to restructure the flagging economy were
being watered down by political opposition and his flagging
popularity since he sacked his popular foreign minister.

Koizumi said he would take all possible steps to tackle
deflation and prevent a financial crisis.

"Regarding deflation steps and measures to prevent a financial
crisis, I will tackle them firmly. I will take all possible
measures," Koizumi said a news conference with Bush.

"I will not loosen the reins on structural reform," Koizumi
said. "There's absolutely no change in that path. My resolve has
not been shaken, I expressed."

Koizumi also said Japan was losing confidence in itself.

"Ten years ago we were over-confident. Now we've lost
confidence. But I would like to tackle structural reform with
confidence and with hope," he said.

Koizumi is due to unveil a set of measures to combat deflation
and promote the disposal of banks' bad loans by the end of
February in the hope this will stimulate the economy, which is
now in its third recession in a decade.