TOKYO — As Tokyo stock prices continued a perilous slide, Japan's Prime Minister Kiichi Miyazawa on Monday promised to present a package of pump-priming measures to help revive the economy.
Although ruling party officials insist that the proposed measures are unrelated to the stock market's decline, the announcement came as the market's Nikkei average plummeted 598.65 points to close Monday at 15,921.22, the first time the index had fallen below 16,000 since Oct. 22, 1986.
Miyazawa's announcement failed to perk up the market early today. At the close of the morning session, share prices were off another 20.88 points at 15,900.34.
The market has fallen nearly 10% over the last 10 days and about 60% since December, 1989.
The declines have spread gloom throughout the business community.
Even Bank of Japan Gov. Yasushi Mieno, who has been consistently upbeat on the economy, admitted Monday that "the business sentiment has become even more cautious amid worsening corporate revenues."
Many economists blame the market's recent weakness on government inaction in the face of a sluggish economy.
"The plunge of the equity market was mostly due to market fears of an inadequate policy response to the economic slowdown," said Robert Feldman, an economist with Salomon Bros. Asia Ltd.
Japan's weak economy has contributed to a sharp decline in imports and a mounting trade surplus, raising fears that Japan will be under pressure to reform its economy at the G-7 summit of leading industrialized nations that begins July 6 in Munich.
Greater government spending would help boost demand for imports and would also slow Japanese exports by strengthening the yen.
Japan is in a strong position to boost spending and act as a locomotive for the world economy because it has a general government surplus of 3%, compared to a 2.4% deficit for the seven leading industrialized nations as a whole.
Party leaders say they expect Miyazawa to offer an outline of his new package sometime over the next two weeks so that he will have something to present to his fellow leaders at the Munich summit.
An early announcement of the package could also help win political support for the ruling Liberal Democratic Party, which faces a critical upper house election July 26.
"The most immediate (election) issue for the people is the economy," Miyazawa said at a news conference Monday.
A rising chorus of party and business leaders have been calling for additional government spending over the past week.
After liberal Democratic Party strongman Shin Kanemaru returned from a visit to Washington where he met with President Bush, he called on Japan to spend an additional $63 billion to boost domestic demand. He said that amount would be needed for Japan to meet commitments to the United States--made by Miyazawa during Bush's Tokyo visit earlier this year--to assure an economic growth rate in Japan of 3.5% in 1992.
Although Miyazawa gave no details, party officials indicated Monday that the supplementary budget would be more like $30 billion, roughly 1% of Japan's gross national product.
This amount would help maintain public spending at current levels but would be unlikely to significantly add to imports or boost economic growth beyond the 2% to 3% level economists are now predicting for 1992.
That is because the government front-loaded its public spending budget to the first half of the year as part of its previous effort to stimulate the economy.
The Nikkei's Continuing Slide The Tokyo stock exchange's Nikkei 225-share average, Friday closes except latest. June 22, 1992: 15,921.22