Japan's Ota says U.S. economy poses risks to Japan

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TOKYO, Sept 26 (Reuters) The possibility of a slowdown in the U.S. economy in light of housing market problems poses risks to the Japanese economy, Japanese Economics Minister Hiroko Ota said on Wednesday.

''If the U.S. economy does not achieve a soft landing and slows down more than that, it will naturally have an impact on Japan,'' Ota told a group of reporters. ''It is a risk factor.'' Ota, who was reappointed to the post on Tuesday by newly chosen Prime Minister Yasuo Fukuda, said falling U.S. housing prices would inevitably take a toll on consumption, which has been supporting demand for overseas goods including those from Japan.

She added, however, that Japan's economic conditions remain firm as a trend and the chances of the U.S. economy negatively affecting the Japanese economy are not high at this point.

Japan's exports to the United States rose 4.6 percent in August from a year earlier, faster than July's pace when they increased 1.3 percent.

Ota also said the new government must press on with economic and fiscal reforms.

''We cannot be complacent and let reforms roll back,'' she said.

''We need to put the message out firmly in order also to win the markets' trust.'' Market participants are wary that the new government under Fukuda may slow down efforts to cut its huge public debt as it seeks to win voters' favour after the ruling bloc took a drubbing in an upper house election in July.

The opposition Democrats successfully appealed to voters who felt left behind by the pro-growth policies of the previous administration.

Japan's outstanding public debt, including that held by central and local governments, totals a hefty 775 trillion yen (.76 trillion), roughly 150 percent of gross domestic product -- by far the highest level among industrial nations.

Ota, 53, a former university professor in government policy, was first appointed to the post in September last year by former Prime Minister, Shinzo Abe, who abruptly announced his resignation earlier this month.

REUTERS PBB GC1603

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