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2013年1月 8日 (火)

日本経済再生 デフレ脱却の成果が問われる

The Yomiuri Shimbun (Jan. 8, 2013)
Government, BOJ must lead Japan out of deflation
日本経済再生 デフレ脱却の成果が問われる(1月7日付・読売社説)


The Abe administration has set economic revitalization as the top priority on its policy agenda.

Can it bring about a business recovery and lead Japan out of deflation to lay the foundation for stable growth in the medium and long term? The "two lost decades" that followed the bursting of the economic bubble must be brought to an end this year.

The government needs to come up with concrete measures for what Prime Minister Shinzo Abe has touted as "economic policy on a different level from previous ones," and implement them flexibly.


Overcome zero growth

Nominal gross domestic product, which more accurately represents sentiment felt by households and businesses, stands at about 470 trillion yen, unchanged from two decades ago. In contrast with China, whose GDP expanded by about 20 times during the same period, Japan has meandered along as a "zero-growth state."

Many experts point out it will become increasingly difficult for Japan to attain economic growth due to its shrinking and aging population and chronically low birthrate. Growth can no longer be simply expected for Japan. Some people probably hold such a pessimistic view.

But is it any use to sit back and do nothing?

At a news conference held after he assumed the post of prime minister, Abe said, "There is no future for a country that abandons hope for growth." He is right. If the people lose their hopes and aspirations, this nation will never regain its economic vigor.

First and foremost, it is necessary to conquer deflation, which has dragged on for more than 10 years. Failure to do this will kill future prospects for growth before they get off the ground. This is because deflation curbs corporate profits and household income, thereby accelerating economic contraction.

The Abe administration will try to rebuild a robust economy by implementing the "three arrows" of combined policy initiatives--drastic monetary easing, flexible fiscal management and a growth strategy to encourage private investment. This prescription for growth is reasonable.

Since late December, the Nikkei Stock Average has been rising sharply and the yen has weakened against the dollar, falling to the 88 yen level to the greenback. This underscores the high hopes pinned on the new administration's economic package.


In parallel with the Bank of Japan's monetary easing, the government will need to make up for weak demand through such steps as effective public works projects.


Stronger cooperation vital

Most important in this respect will be to bolster cooperation between the government and the bank.

Abe asked central bank Gov. Masaaki Shirakawa to agree on setting a 2 percent inflation target and conclude a policy accord. The bank is likely to introduce an inflation target sometime this month. The government and the bank must set a clear inflation target and share responsibility for achieving it.

Worryingly, Abe and some other Cabinet members have been forward in calling for the central bank to conclude the policy accord and other matters, by linking them with a revision of the Bank of Japan Law and the appointment of Shirakawa's successor.

During World War II, the government made the central bank buy government bonds, triggering a plunge in government bond prices and hyperinflation.

If the Bank of Japan's independence is eroded, it could cause government bond prices to nosedive. We urge the Abe administration to strictly refrain from making comments and taking actions that could be misconstrued as attempts to exert political pressure on the central bank.

Tackling fiscal reconstruction will require ending dole-out policies and steadily raising the consumption tax rate. Such efforts also will be essential to ensure market confidence in government bonds.


Consider corporate tax cut

Besides deflation, the Japanese economy is riddled with many problems.

It is welcome news that the historically high value of the yen is being corrected. But if the yen falls too far, there will be such side effects as an expansion in the trade deficit.

In particular, imports of fuel including liquefied natural gas are rising sharply to keep thermal power plants operating at full capacity in place of the mostly idled nuclear power plants.

The weaker yen will push up the costs of importing fuel, which will flow on to higher electricity bills. We hope such "bad price increases" can be avoided. Restarting nuclear reactors whose safety has been confirmed is important from the standpoint of easing such side effects of the weaker yen.

It is certain that domestic consumer and other markets are heading for contraction as the working generations shrink. Should the number of workers fall, economic growth will slow down.

Provide more government support to people raising children to help stop Japan's population from declining; Prevent the labor market from shriveling by promoting the employment of women and elderly people; Enhance Japanese companies' international competitiveness by lowering the excessively high corporate tax rate.

It is already known what policies are needed to revitalize the economy.

In such sectors as health and nursing care, where demand will grow in step with the aging population, there is potential demand for higher-quality services even if they come at a higher cost. We think the government should press ahead with reviews of the rigid rules and regulations in these sectors.

The government must inject money and manpower intensively and boldly into effective projects, and implement them quickly.

By making good use of the Council on Economic and Fiscal Policy--which is to be reinstated under the Abe administration--and the newly established headquarters for Japan's economic revitalization, the government must eradicate the evils of bureaucratic sectionalism at government ministries and break down entrenched vested interests.

It is essential for Japan to join the Trans-Pacific Partnership free trade framework led by the United States so it can harness demand in foreign markets, including in Asia.

Business circles, including the Japan Business Federation (Keidanren), are imploring the government to take part in the TPP negotiations soon so as to promote growth. The government should quickly decide on Japan's joining the talks and get involved in formulating the partnership's rules on trade and investment. That will indeed serve the interests of the nation.

(From The Yomiuri Shimbun, Jan. 7, 2013)
(2013年1月7日01時26分  読売新聞)


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