TOKYO, Aug 5 - Bank of Japan Governor Toshihiko Fukui said on Tuesday the Japanese economy was not heading in a bad direction and that current yields on government bonds were not adversely effecting the economy or financial system. "It (the economy) is not going in a bad direction," he told reporters after economics ministers approved the government's latest assessment of the economy. He added that Prime Minister Junichiro Koizumi agreed with his view on the economy and that the central bank and the government would work together to improve it.