NEW YORK – The Group of Seven financial leaders will urge Japan to make further efforts to achieve economic recovery led by expanded domestic demand when they meet in Fukuoka on Saturday, U.S. Treasury Secretary Lawrence Summers suggested Wednesday.
“As we have said on many occasions, the achievement of sustained domestic demand-led growth is an absolute, crucial priority for Japan,” Summers said of the upcoming meeting of G7 finance ministers in Fukuoka.
“We believe that it is appropriate that the Japanese government continue to maintain that priority,” Summers told reporters at the United Nations headquarters.
The G7 meeting will be held as a prelude to the Group of Eight summit in Okinawa.
The Treasury secretary described the global economy as “good overall” but warned against excessive optimism while underlining the need for Tokyo to play a key role in promoting world economic recovery.
“There is no room for complacency. And achieving a more balanced pattern of global expansion, especially through the achievement of more rapid and solid growth in Japan, accompanied by sustained expansion in Europe, will be an important topic” at the G7 meeting, he said.
Summers urged Japan and Europe to do more to stimulate their economies in the wake of the recent slowing of the U.S. economy.
“We all see a common desire to balance up rather than balance down. That points to the importance of demand-led growth both in Europe and in Japan,” he said.
Summers declined to comment on whether the Bank of Japan should end its long-standing “zero-interest-rate” policy.
At the end of June, the BOJ decided to maintain the ultraeasy credit policy, which has been in place since February 1999.
But speculation is growing that the Japanese central bank will soon end the 16-month policy amid recent signs of economic recovery in Japan.
Pressure for ending the policy has increased further following the release earlier this week of the BOJ’s key business sentiment report showing a substantial improvement from three months earlier.
Confidence over IT
The government believes it would be able to win public support were it to compile an extra budget for fiscal 2000 focusing on the development of information technology, Chief Cabinet Secretary Hidenao Nakagawa said Thursday.
“Since (IT) is a strategy that could determine Japan’s future, we believe we can win sufficient understanding from the public,” the top government spokesman said at a regular news conference.
Nakagawa, however, also said it was still too early to say whether the government will do so. He said the plan will be discussed at a new panel of IT experts to be launched this month.