Prime Minister Shinzo Abe instructed his ministers Wednesday to compile new economic stimulus measures within the month, aiming to achieve goals that include boosting Japan’s nominal gross domestic product to ¥600 trillion ($5 trillion) in five years’ time.
“In order to achieve a postwar record high GDP of ¥600 trillion in five years, I would like the business community to actively engage in capital investment and wage increases,” Abe told a meeting of the Council on Economic and Fiscal Policy, adding that the government will assist companies in making such efforts.
The GDP goal set for fiscal 2020 represents an expansion of more than 20 percent from ¥491 trillion in fiscal 2014 ended last March, with skepticism already growing among economists over whether the target is achievable.
In the meeting, members from academia and the business sector proposed achieving the goal by boosting private consumption by around ¥60 trillion from ¥293 trillion last fiscal year, saying it could be achieved through wage increases on the back of robust earnings.
One member said wages need to be raised by an average 3 percent annually, and called on the government to lift the legally binding minimum wage as part of the effort.
The members also urged the government to further cut the effective corporate tax rate below 30 percent, while underscoring the need to boost business investment by more than ¥10 trillion from ¥69 trillion.
Amid the recent tourism boom in Japan, partly helped by the weak yen, the panel members called for boosting spending by foreign tourists to between ¥7 trillion and ¥10 trillion, from ¥2 trillion in 2014.
Abe announced the GDP goal in September, saying he will focus on shoring up economic growth and reforming the welfare system to make it easier for people to raise children or care for the elderly while working.
The government is aiming to realize an economic recovery led by domestic demand, including business investment and household spending, as the economy has suffered from weak exports and production in the wake of a slowdown in the Chinese and other emerging markets.