TOKYO. Nov 10: Japanese policy makers painted a gloomy picture yesterday of prospects for an economy recovery but asked Japanese to be patient as they tackle the protracted recession. reports Reuter.

The government's Economic Planning Agency (EPA) said Japan's stagnant economy shows no signs of a turnaround in the foreseeable future.

The Nikkei closed down 499.45 points, or 2.68 per cent, at 18.125.71. The dollar jumped to 108.08 yen before falling back to close at 107.97 yen.

An EPA official said the move towards recovery that was thought to be spreading in recent months had fizzled, judging front worsening business sentiment and unsold goods still plljd up in corporate ware-

houses.

So far there is no sign that the economy will turn a round In the near future, the official said. "It has slipped back to the state seen in March, when signs of recovery had not yet emerged.

Japanese businessmen and labour unions have been pressing hard for income tax cuts to stimulate consumer spending.

Finance Minister Hirohisa Fujii told reporters Japan had no immediate plan to trot out more stimulus measures after recent increases in public works spending and drastic credit easing.

Later, he told the finance committee of parliaments' lower house that the next step was to reduce income taxes in the pro-

cess of tax. reforms, not as top gap gift to consumers.

A government tax advisory panel is expected, in a report on November 16, to propose raising the consumption tax rate and cutting income taxes. The size and timing of the changes will be left to politicians to decide.

Fujii argued that taxpayers were more likely to save the money from such tax cuts than spend IL

The current recession Is complicated by damage from the high yen. structural problems that need deregulation and the aftermath of the past asset Inflation. Fujii said.

The economy will never get beck on track only by boosting overall demand and ignoring structural problems he said.