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Abe says his way is ‘the only way’

by Jacques Lhuillery

AFP-JIJI

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.

  • zer0_0zor0

    Abe needs to shelve his nationalistic predilections and mend relations with China.

    Having damaged the relatively good relations with China, which has basically anchored the Japanese economy for the past 20 years or so, Japan has set its manufacturing industry somewhat adrift in rough seas.

    If Japan can’t regain its footing in the automotive as well a other markets there, , I would imagine that the incentive for China to buy Japanese bonds would continue to recede.

    The scale of the Senkakus debacle appears yet to be grasped by some of these politicos. The country had been in deflation with relatively strong performance in Chinese markets, so the difficulties are somewhat compounded by that activity being suppressed, and monetary policy alone is not a long term solution but a short term fix.

  • YoDude12

    So now we know the price the Japanese middle class will have to pay to keep Japanese “place in the world.” Its about saving face, making your rich friends richer, and doing it on the back of the middle class.