Japanese Prime Minister Shinzo Abe yesterday unveiled a package of measures aimed at boosting Japan’s long-term economic growth, from phased-in corporate tax cuts to a bigger role for women and foreign workers, but applause from investors is likely to be muted after Tokyo backpedaled on bolder reforms.
Japan’s economy has shown signs of revival since Abe took office 18 months ago pledging to end deflation and generate sustainable growth with a triple-pronged strategy he called his “Three Arrows,” but policymakers acknowledge that more must be done to cement the recovery after two decades of stagnation.
“There are no taboos or sacred cows for my growth strategy,” Abe told a news conference after the measures were approved by his Cabinet.
Photo: Bloomberg
He said that a “positive cycle” was emerging as rising corporate earnings lead to higher wages, but that the recovery had yet to spread to the regions.
Experts said the update of the so-called “Third Arrow” — most of which had been trailed in advance — is a step in the right direction, but want to see how its reforms are fleshed out and implemented.
The first two “arrows” are massive monetary easing, which has helped push up asset prices, and fiscal spending to stimulate demand.
Private economists surveyed by Reuters forecast that the growth strategy could boost Japan’s potential growth rate by 0.2 to 1.5 percentage points from its current level of about 0.5 percent, but that it would take time.
“Even after the government growth strategy is announced, various legislation must be enacted and it will take time for companies to begin to act. Therefore, it will be 10 to 20 years before the potential growth rate rises,” Japan Research Institute vice chairman Kenji Yumoto said.
Yumoto said it was possible, but very difficult, for Japan to hit the 2 percent growth level the government says is needed to reduce its mammoth public debt.
The centerpieces of Abe’s plan are a future cut in Japan’s effective corporate tax rate — among the highest in the world — to below 30 percent over the next several years, and a promise to reform the US$1.26 trillion Government Pension Investment Fund (GPIF) in ways likely to reallocate more money to the stock market.
Earlier in the day, Abe urged the nation’s business leaders to do more to boost the role of working women, a key plank in the growth strategy and seen as vital to address the shrinking workforce in one of the world’s most rapidly ageing societies.
Abe’s remarks came one day after a Tokyo assembly member from his ruling Liberal Democratic Party apologized for heckling a female assembly member with sexist comments.
The package also included steps to raise the number of highly skilled foreign workers and expand a controversial foreign trainee program; boost productivity through a “robotic revolution” and target the healthcare sector for growth.
TYPHOON: The storm’s path indicates a high possibility of Krathon making landfall in Pingtung County, depending on when the storm turns north, the CWA said Typhoon Krathon is strengthening and is more likely to make landfall in Taiwan, the Central Weather Administration (CWA) said in a forecast released yesterday afternoon. As of 2pm yesterday, the CWA’s updated sea warning for Krathon showed that the storm was about 430km southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost point. It was moving in west-northwest at 9kph, with maximum sustained winds of 119kph and gusts of up to 155kph, CWA data showed. Krathon is expected to move further west before turning north tomorrow, CWA forecaster Wu Wan-hua (伍婉華) said. The CWA’s latest forecast and other countries’ projections of the storm’s path indicate a higher
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