Masaru Takagi, a professor of economics at Meiji University, welcomed Prime Minister Ryutaro Hashimoto's announcement Thursday of a plan to launch a pump-priming package, including 10 trillion yen in "real water" spending.
Real water refers to actual fiscal spending by the central and local governments. "It is very significant that the prime minister himself promised 10 trillion yen," Takagi said. "This will produce considerable positive effects, although the contents of the package are still vague."
He said the major problem, however, is that Hashimoto has not admitted making policy mistakes, which have aggravated the already weak economy. Hashimoto spoke as if he is not to blame for Japan's economic troubles or those of other Asian nations, Takagi said. Beginning with the consumption tax increase last April, a series of policy mistakes has pushed the economy into stagnation, he said.
Hiroshi Sakai, general manager of the corporate planning department at Asahi Mutual Life Insurance Co., expressed approval of the amount of the fiscal stimulus measures. The largest amounts presently available are 4 trillion yen for tax cuts and 16 trillion yen for the total pump-priming package, Sakai said.
The package, however, is not enough to help stock prices recover or to give the entire economy a lift, he added. "More measures must be taken" to warm up consumer and business sentiments as low consumption and fixed business investment are causing the economy to lag, according to Sakai.