The economy is moving upward slowly, fueling debate about the need to put the nation's financial house in order. The question is how soon efforts should be stepped up to put both the central and local governments on a sounder fiscal footing.

First of all, it must be ascertained whether domestic demand is strong enough to assure sustainable economic growth. Efforts to rein in the spiraling budget deficit through fiscal spending cuts and tax increases will no doubt have a serious negative impact on the economy.

It is unnerving to note that signs of an upturn in consumer spending are still nowhere in sight, though fixed investment is turning higher. Electronic machinery manufacturers, in particular, are gearing up for increased capital investment to meet growing demand from the information-technology industry.

However, consumer spending, another major driving force for the economy, could take time to turn higher. Many firms are pressing forward with comprehensive restructuring programs, raising doubts about a quick improvement in employment and income prospects.

In other words, a strong pickup in domestic demand in fiscal 2000 appears unlikely, with a quicker tempo of capital investment likely to fail to provide a major lift to personal consumption. Therefore, the nation may have no choice but to continue waiting for a pickup in domestic demand through much of the current fiscal year.

The nation may not be able to start pressing forward with deficit-cutting programs until after the current fiscal year.