Koizumi to shuffle cabinet, sees recovery


Koizumi came under pressure from O'Neill, who says Japan needs to do more to boost growth in the region

staff and wire reports

NEW YORK -- Japanese Prime Minister Junichiro Koizumi said Japan is showing signs of recovery.

"While the Japanese economy is still in a difficult situation, the results of reforms are steadily appearing, and some parts of the economy are beginning to show improvements," he told a seminar at the Council of Foreign Relations on Tuesday.

Koizumi also said Tuesday that he will reshuffle his cabinet on September 25, when he returns from a trip to Denmark for the Asia-Europe Meeting.

His views that a tentative rebound is underway got a boost on Wednesday. Japan's Gross Domestic Product was revised upward to a 0.6 percent rise in the quarter through June. (Full story)

That's the first quarter of growth in five quarters and up from an initial 0.5 percent estimate.

But Koizumi also felt himself under pressure from U.S. Treasury Secretary Paul O'Neill.

O'Neill: Japan must do more

O'Neill said Japan and Europe should both do more to boost economic growth in their regions, so that the United States is not the lone driver of growth.

Japan has to put its economy "on a more aggressive real growth rate than they've been for the last 12 years," he told U.S. television.

Koizumi has travelled to the United States to take part in a ceremony commemorating September 11 and to pay his respects at the World Trade Center site.

Koizumi also meets U.S. President George W. Bush on Thursday, when he plans to outline his economic policies and reform push.

A deep stock-market slump and one of Japan's worst recessions since World War II has left the prime minister under pressure to spur growth.

Sustained growth through reform

Koizumi has mooted a plan to buy exchange-traded funds with government pension funds, a controversial move that will be debated further when he returns to Japan. (Ministers dislike plan)

Koizumi, who has drawn fire for not focusing enough attention on domestic policy, is conducting a round of diplomacy that will also see him travel to North Korea, on September 17.

In his speech to the Council of Foreign Relations think tank, he discussed his belief that Japan cannot see sustained growth without economic reform. He admitted that bad loans had shackled Japan.

He also said turning Japan's economy around is the biggest contribution Japan can make to the world community.

At the same event, the Japanese leader pushed Iraq to admit United Nations weapons inspectors.