JAPAN ECONOMY MAY START BOTTOMING OUT SOON -AGENCY Japan's economy remains sluggish but is beginning to show signs it may bottom out soon, the Economic Planning Agency said in a monthly report submitted to Cabinet ministers. But a bottoming out of the economy depends largely on the yen's exchange rate trend in the immediate future, Agency officials said. The officials told reporters industrial production, down 0.5 pct in January from December, is likely to turn positive in February and to rise thereafter, raising hopes for a brighter economic outlook. The Agency predicted industrial production will grow 2.5 pct in the current January/March quarter after falling 0.7 pct in the previous quarter. A rise of this size would be the largest since the fourth quarter of 1984 when industrial output rose 2.7 pct, the officials said. They also said an expected upturn in exports would be a mixed blessing as it would contribute to economic growth but would increase the chance of trade friction. Japanese exports contracted five pct in February from January but are likely to grow from March if the yen stabilizes around current levels, the officials said. They predicted exports will increase by 2.3 pct in the January/March quarter from the October/December quarter. "But the problem is imports are not expanding," said one official. Imports fell by 9.4 pct in February from January.