After enacting contentious security bills earlier this month, Prime Minister Shinzo Abe has declared that he is refocusing on the economy, with the goal of boosting gross domestic product by 20 percent to ¥600 trillion in 2020.
The figure has been met with deep skepticism. On Tuesday, the top executive of a leading business lobby called it an “outrageous” and “impossible” numerical target.
“I believe ¥600 trillion is an outrageous figure,” Yoshimitsu Kobayashi, chairman of Keizai Doyukai (Japan Association of Corporate Executives), told a news conference in Tokyo. The sentiment is shared by many economists and market players.
Kobayashi, who represents one of the country’s three most powerful business lobby groups, said he welcomed Abe’s new goal as “a political message” for the nation and its business circles, but only as a general statement of intent.
Achieving it will be almost impossible because the country would need to maintain a nominal growth rate of 3 percent every year until 2020, Kobayashi said.
Kobayashi, chairman of Mitsubishi Chemical Holdings, pointed out that Japan’s potential growth rate is thought to be just 0.5 percent or less.
The last time Japan saw GDP growth of more than 3 percent was in 1991, amid the closing days of the bubble economy.
In fiscal 2014, Japan’s nominal GDP grew 1.6 percent to ¥490.8 trillion, even though the Bank of Japan was operating an ultra-loose monetary policy and the government was expanding spending despite snowballing public debt.
“Frankly speaking, ¥600 trillion is an impossible figure. I only see it as a political message,” Kobayashi said.
After being officially reappointed president of the ruling Liberal Democratic Party on Sept. 24, Abe declared in a speech that his “Abenomics” economic policy is now entering its second phase, whereupon he declared the new goal of achieving ¥600 trillion in GDP by 2020.
His speech was immediately condemned for lacking specific measures to achieve such a level of growth.
Abe also vowed to increase the nation’s dwindling birthrate by implementing measures to help households with children and thereby keep the population at around 100 million or more over the next five decades.
Furthermore, he pledged to increase the number of special nursing facilities for the elderly and to improve the working conditions of care workers there. However, the speech omitted mention of how such costly social security measures would be financed.
On Tuesday, Akira Amari, minister in charge of fiscal and economic policy, said in an online statement that the Cabinet reshuffle on Oct. 7 will be followed by a “comprehensive package” of policy measures to substantiate the goals set out in Abe’s speech. No further details were given.
Chief Cabinet Secretary Yoshihide Suga said details will be revealed “from now on.”