WASHINGTON – Former World Bank President Robert Zoellick said Monday Japan’s economic drive needed accompanying structural reforms, voicing fear that recent growth could be just a “sugar high.”
Japan posted 0.9 percent quarter-to-quarter growth in the three months through March, during which time Prime Minister Shinzo Abe took charge with a platform that has featured ramping up money supply and intense fiscal stimulus.
“On the one hand, I think it’s understandable that Prime Minister Abe would come in and try to have some shock effect. But no one should be under the illusion that this isn’t a big if,” said Zoellick, whose term ended last year.
“What I would watch . . . (is) how do you make sure that it isn’t just a sugar high? How do you make sure that there is a follow-through?” Zoellick told a forum on relations between the U.S. and New Zealand.
Zoellick said Japan already had a debt problem and needed to go through structural changes to liberalize its economy.
He voiced hope Abe’s move to enter talks on the emerging Trans-Pacific Partnership was a way to force Japan into taking politically risky reforms.
“If Japan doesn’t undertake those structural reforms, either through its own policies or through the TPP or both, I worry that this will primarily be a currency devaluation strategy — and that has dangers for others,” he said.