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2009年11月21日 (土)

デフレ認定 日銀は政府と危機感の共有を

The Yomiuri Shimbun (Nov. 21, 2009)
BOJ must get serious about deflation
デフレ認定 日銀は政府と危機感の共有を(11月21日付・読売社説)

The Japanese economy, as had been widely expected, is mired in deflation as prices continue to fall.

In a monthly economic report released Friday, the government acknowledged the economy is in a mild deflationary phase and warned that deflation could impede the nation's recovery.

In March 2001, the government for the first time in the postwar period acknowledged that the nation's economy was in deflation due to prolonged price drops. The government has not declared that the economy has overcome this deflation. Conversely, deflation has returned to haunt the economy before a full recovery could be confirmed.

The government and the Bank of Japan must closely cooperate and use all available policy tools to ensure a complete departure from deflation this time.

Falling prices are good news for consumers. But lower prices mean reduced profits for companies, which often results in job and salary cuts. If this situation generates drops in consumption and further price falls, the economy could tumble into a deflationary spiral.


Economic prospects gloomy

A lack of demand is the prime cause of deflation. Accordingly, bringing an end to deflation will require boosting demand. However, the future of the nation's economy is uncertain.

Gross domestic product has registered positive growth for the past two consecutive quarters thanks to the government's stimulus measures, such as the eco point purchase incentive program for energy-efficient home appliances and the subsidy scheme for eco-friendly vehicles.

But the unemployment rate remains stubbornly high and winter bonuses are set to be cut significantly. Prospects for the year-end shopping season are decidedly gloomy. The impact of the freeze on some public works projects under the administration of Prime Minister Yukio Hatoyama is yet another cause for concern. Compounding this grim situation, the appreciation of the yen pushes down prices of imported products.

The government intends to make measures related to employment, the environment and child care the centerpieces of a second supplementary budget for this fiscal year and the initial budget for next fiscal year.


Govt must watch its pennies

But the government is facing a severe fiscal situation. If a massive amount of government bonds were issued, interest rates might rise sharply. The government must avoid resorting to generous spending. Instead, it should make proper budget allocations that focus on projects that will likely generate an immediate expansion in demand.

Some government officials reportedly have floated the idea of introducing a housing version of the eco point scheme. We hope the government comes up with effective measures, without merely sticking to its policy pledges just for sake of doing so.

Compiling a mid- to long-term strategy to achieve private sector-driven growth without relying only on fiscal measures to stimulate demand remains an urgent task on the government's to-do list.

Meanwhile, we doubt if the Bank of Japan, which should play a central role in combating deflation, is taking the price falls as seriously as the government is.

The Organization for Economic Cooperation and Development on Thursday said deflation in Japan would linger through 2011. The organization also called on the Bank of Japan to fight deflation with quantitative easing measures.

At a policy board meeting Friday, however, the central bank decided to keep the current key interest rate unchanged. Bank of Japan Gov. Masaaki Shirakawa suggested additional measures, such as further quantitative easing, are not needed.

The central bank appears to lack the government's concern when it comes to deflation.

(From The Yomiuri Shimbun, Nov. 21, 2009)
(2009年11月21日01時28分  読売新聞)


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