Japan's strong economy has survived the latest oil price crisis and is ready for a little pump priming to pull it out of a slight recession.
That is the conviction of confident economic planners who have put the finishing touches on a package of economic stimuli they think will clear up the minor dislocations left by what Japanese call "the second oil shock."
They believe the economy will be right on target when the current fiscal year ends next March, winding up with the 4.8 percent increase in gross national product Japanese economists have aimed for.
"We have learned many things from the first oil crisis," says Seiichiro Tanaka, director-general of Japan's economic planning agency's research bureau. "This time our reactions have been very reasonable."
Tanaka was referring to the first oil shock of 1973, which threw Japan into a near panic. Runaway inflation sent the prices of everything soaring and massive hoarding was discovered. To curb it, the government threw the brakes on suddenly, sending the economy into a deep recession.
It appeared early this year, with wholesale prices soaring, the disaster might be repeated. This time the government applied only modest pressure, raising bank loan rates and trimming public works spending. By the end of this summer it appeared that inflation had run its course.
This year's growth so far is attributed mainly to a massive exporting campaign, which has raised export volume 20 percent above last year and created a comfortable billion-dollar surplus in trade.
But the domestic market has remained in a mild slump and the government, confident that inflation is under control, has embarked on a program of modest stimulation.
On Sept. 5, the cabinet ministers approved the pump-priming measures. The main feature is a hefty 30 percent increase in public works spending for the October-to-December quarter. The package also calls for more financial aid to hard-hit, small- and medium-sized enterprises, "appropriate financing" for the sagging housing construction industry and incentives for investment in manufacturing equipment.
Tanaka said the government is switching from a policy of "stabilization only" to one of stabilization mixed with a modest expansion, intended to spur an increase in domestic consumption next year.
He said the government still intends to hit its target of a 4.8 percent growth in this fiscal year. Private economic research organizations have been slightly more cautious. The Mitsubishi Research Institute predicts the growth rate will top out at only 4.5 percent.