Prime Minister Shinzo Abe said his policies are “the only way” to fix the economy, days after the IMF warned it could all go wrong.
His comments came Thursday after the International Monetary Fund welcomed his big-spending and loose-money plans but cautioned there are “considerable downside risks” to the ballooning national debt.
“The Japanese economy has been stagnant and has suffered from deflation over the last 15 years,” Abe said in an interview. “Our GNI (gross national income) has diminished some ¥50 trillion. Under these circumstances, Japan was losing its position in the world.
“To counter this, I will push through drastic monetary policy, fiscal measures and a growth strategy that will stimulate private-sector investment, so that the economy can be rid of deflation.”
The Washington-based IMF, which expects Japan’s economy to grow 1.6 percent this year, said the policy prescription dubbed “Abenomics” offers “a unique opportunity to end decades-long deflation and sluggish growth, and reverse the rise of public debt. The rewards are potentially large.”
But in a report issued May 31, the IMF warned that success is not guaranteed, and public borrowing — already more than twice the size of the economy — has to be reined in and tax revenues have to rise.