WASHINGTON - A Pacific free trade pact would give a big boost to Japan’s economic growth and individual incomes, according to an International Monetary Fund economist.
“It could be annually between 0.2 to 0.3 percent (percentage point) per year as an additional impact on growth,” Luc Everaert, head of the IMF’s Japan Division, said in a recent interview, referring to the impact that conclusion of the Trans-Pacific Partnership would have on the annualized real growth rate.
“If you accumulate this over a 10-year period, that adds up of course to a significant increase. This is only the pure effect of the TPP,” said Everaert, who also serves as assistant director of the Asia and Pacific Department of the Washington-based lender.
Everaert also said overall rate of income increases in Japan would rise by an additional 2 to 4 percentage points in about 10 years after the U.S.-led trade deal, being negotiated by the United States, Japan and 10 other Pacific Rim countries, is signed. The pact would cover some 40 percent of the global economy.
“A successful conclusion of the TPP agreement is very important for the Japanese economy, and the Asian region as a whole,” Everaert said.
The 12 countries are set to hold ministerial talks next week in Hawaii in an attempt to conclude their marathon negotiations. Japan and the United States account for a combined 80 percent of their gross domestic product.
Commenting on measures aimed at propping up the Japanese economy taken by the government of Prime Minister Shinzo Abe since he took office in 2012, Everaert said, “Our evaluation is that Abenomics has been very positive to the economy so far.”
“One of the main benefits is that it has put a floor on the prices…the real estate prices are stable, the equity market has increased,” Everaert said, saying that the risk of deflation has “diminished as a result of ‘Abenomics.'”
Citing the importance of implementing structural reforms, Everaert said Japan should further empower women by allowing people to operate child care facilities more freely and “think more about how you can integrate foreign workers in the labor force.”