Each of the candidates in the race for the LDP’s presidency expressed sharply conflicting views Thursday on whether the economy is really recovering, as some indicators suggest.
During a joint news conference organized by the Japan National Press Club, incumbent Prime Minister Junichiro Koizumi talked about the “buds” of a long-term recovery.
In a sign of economic recovery, the Nikkei average has recently surged to over 10,000 from under 8,000 in a matter of months.
Koizumi said the recovery is due to his belt-tightening economic reform drive and argued that his fiscal policy to curb the issuance of government bonds should be maintained.
Shizuka Kamei, a former Liberal Democratic Party policy chief, said recent economic indicators only reflect conditions in urban areas and of major companies listed on the Tokyo Stock Exchange. Kamei said massive fiscal spending is needed to shore up ailing rural economies and help small companies.
Former Foreign Minister Masahiko Komura admitted the economy is getting better but argued that more pump-priming measures are necessary to reach a stable recovery. He said that once already during the country’s decade-long stagnation, the government made the mistake of thinking an uptick was a full-fledged recovery — and then implemented the wrong policies.
Former transport minister Takao Fujii said the government should help small companies before trying to regain fiscal balance.