Japanese Economic Reform On Howard Agenda

Scoop sources say the Japanese economy, which is reeling under a staggering $10,000 billion debt, will be a key issue for Australian Prime Minister, John Howard, after arriving in Tokyo tonight. Maree Howard reports.

Mr Howard is expected to offer full support to the radical economic reform plan of his new Japanese counterpart Junichiro Koizumi.

The Japanese economy is faltering under massive debts which currently run at 140 percent of its total economy and more than 20 times the Australian economy.

Because of deep trade links between the two nations, Mr Howard is expected to raise concerns that if the Japanese economy collapses, it would be a disaster not only for Japan but for the Asia-Pacific region.

Mr Koizumi won a mandate last week when a majority of Japanese voters supported his coalition's economic reform program.

Japan is Australia's largest export market and third largest source of foreign investment.

Thousands of Australian car workers rely on the fate of Mitsubishi's Adelaide plant, which will be discussed by Mr Howard when he meets company bosses tomorrow.

Both Australian Federal and State Government's have offered major concessions to the company to keep the plant operating beyond 2004.

It is understood the Howard Government is deeply worried about Japan's economic crisis and its ability to shake off its woes which is critical for the whole region.

Meanwhile, in the U.S. the Federal Reserve is expected to lower interest rates for the seventh time this year by reducing rates another 50 points.

According to figures from the U.S. Commerce Dept American consumers outspent their income in June. Financial Houses cheered the news on Wall Street and are relying on consumers to spend the U.S. out of its deepening economic malaise.

However, analysts say that too many consumers are using the equity in their homes to borrow against to maintain a high lifestyle. They warn a speculative bubble is now forming in the housing market and say a crunch in that sector will be severe.

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