Prime Minister Shinzo Abe’s updated plan for reviving Japan’s economy and achieving a GDP target of 600 trillion yen (USD 5 trillion) suggests a recognition that earlier policies are not doing the trick.
Abe took office in late 2012 vowing to end deflation and rev up growth through strong public spending, lavish monetary easing and sweeping reforms to help make the economy more productive and competitive. So far, those “three arrows” of his “Abenomics” plan have fallen short of their targets though share prices and corporate profits have soared.
Recent data suggest consumers and corporations remain reluctant to step up spending the key to getting growth back on track.
Japan’s inflation rate remained flat at 0.2 per cent in August, according to data reported today, with core inflation excluding volatile food prices slipping 0.1 per cent.
A preliminary survey of manufacturers released yesterday showed a sharp drop in export orders. Recent corporate investment figures were likewise worse than expected.
In a news conference yesterday, Abe did not dwell on those harsh realities.
“Tomorrow will definitely be better than today!” Abe declared on national television. “From today Abenomics is entering a new stage. Japan will become a society in which all can participate actively.”
Abe announced his updated economic platform after his re-election, unopposed as head of the ruling Liberal Democratic Party. The initiative also appears aimed at shoring up support ahead of elections for the upper house of parliament next year, analysts said.
The new targets indicate a fresh resolve to focus on the economy after enacting security legislation enabling Japan’s military to participate in combat even when the country is not under direct attack.
Abe’s popularity ratings took a hit after the “collective self-defense” law was forced through parliament, as thousands of Japanese converged outside in protest.
Apart from his 600 trillion yen (USD 5 trillion) GDP target, Abe says he is determined to ensure that 50 years from now the Japanese population, which is 126 million and falling, has stabilised at 100 million.
He also set a target for increasing the birth rate to 1.8 children per woman from the current very low rate of 1.4.
Abe said his new “three arrows” are a strong economy, support for child rearing and improved social security, to lighten the burden of child and elder care for struggling families. But with Japan also committed to reducing its massive public debt, it is unclear how he intends to achieve those goals.