A top Finance Ministry official ruled out on Mar. 3 the need for fiscal economic stimulus at this time, expressing confidence that the nation’s recovery can be led by domestic demand.
Vice Finance Minister Tadashi Ogawa told a news conference that he expects the economy to basically follow the government’s projection for fiscal 1997 of 1.9 percent real growth in gross domestic product. In such an environment, and with the need to achieve fiscal reconsolidation, additional pump-priming policies need not be considered at this point, he indicated.
Last week, Deputy U.S. Treasury Secretary Lawrence Summers said he wants Tokyo to prevent its trade surplus from rising again, adding that it is imperative for Japan to restore domestic demand-led growth. Summers also said Japan should take “appropriate steps” to ensure growth, an apparent reference to pump-priming steps. This was taken as a sign that the U.S. is concerned over how Japan’s economy will react to factors such as April’s consumption tax hike from the 3 percent to 5 percent.