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2009年2月17日 (火)

GDP大幅減 不況脱出の処方箋を示せ

The Yomiuri Shimbun (Feb. 17, 2009)

Govt must present plan to end recession

GDP大幅減 不況脱出の処方箋を示せ(217日付・読売社説)

The Japanese economy appears to have strayed into a tunnel of a grueling recession the likes of which it has never experienced.


The government said Monday the country's economy contracted in the October-December quarter, falling at an annualized rate of 12.7 percent from the previous quarter--the first double-digit decline in 35 years.


The 3.3 percent decline in gross domestic product from the July-September period was second-largest drop in the postwar period after the contraction of 3.4 percent in the January-March quarter of 1974, when the country was feeling the effects the first oil crisis. With a significant contraction also likely in the January-March period, the nation's economy in fiscal 2008 is expected to post the largest negative growth in the postwar period.


The Japanese economy is deteriorating at a significant and accelerating rate. The government and ruling parties must quickly present a prescription for getting the country out of this recession.


The global recession caused Japan's engine of growth, which is fueled by overseas demand, into reverse and the country's economy is nose-diving even more steeply than those of Europe and the United States, where the current economic downturn originated.


The deteriorating economies overseas slammed the brakes on the country's exports, causing production and capital investment to be scaled down. The number of jobs being lost is surging as companies are accelerating their drive to cut personnel.



Destructive spiral

Corporate restructuring has expanded to the ranks of regular workers, and consumption, which is the main pillar of domestic demand, has started to shrink. The economy is now in a persistent vicious circle, in which falling consumption causes a further decline in production.


The government has compiled economic stimulus measures three times since summer. Those center on "painkillers" amid the economic deterioration such as employment measures and support for companies trying raise capital.


Although the economic stimulus package is sizable, totaling 75 trillion yen, so-called real water spending, or direct fiscal outlays, is about 12 trillion yen, which includes 2 trillion yen in universal flat-sum cash handouts. To put a stop to the negative cycle, in which sluggish external demand dampens domestic demand, a specific type of economic stimulus measure, in particular fiscal stimulus to make up for the lack of demand, might be necessary.


Despite the acute emergency, Diet deliberations on economic stimulus measures are running behind.



Delay is not an option

Bills required to execute the second fiscal 2008 supplementary budget are not expected to pass the Diet until next week or even later. Deliberations on the bills must not be dragged out any further and necessary economic measures should be implemented quickly.


The fiscal 2009 budget should also be passed by the Diet at an early date so that it will be implemented immediately from the start of the fiscal year.


It is desirable that the fiscal 2009 budget be executed earlier than originally planned. Also, it is necessary to start discussions on additional measures with the supplementary budget to ensure constant economic stimulus.


We hope that the valuable budget will be effectively used on growing fields in the future, including energy conservation and environmentally friendly technology, and to strengthen safety and security, including making schools and public facilities earthquake-resistant. Projects should be carefully examined to prevent nonessential items from being folded into the budget.


A fall in tax revenues is certain. Therefore, it is unavoidable that economic stimulus measures will be funded by issuance of new bonds.


To prevent long-term interest rates from rising as a result of new bond issuance, the government and the Bank of Japan will need to closely coordinate, including an increase in the purchase of government bonds by the central bank.


(From The Yomiuri Shimbun, Feb. 17, 2009)

20092170135  読売新聞)


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