The government of Prime Minister Shinzo Abe should step up efforts to revamp the labor market, encourage businesses to raise wages and restore the nation's debt-ridden finances through consumption tax increases as part of efforts to spur the flagging Abenomics policy mix, the International Monetary Fund said Tuesday.
With Japanese policymakers finding it ever more difficult to rely on exports, increased debt and further monetary easing for revitalizing the economy and achieving the Bank of Japan's 2 percent inflation target, the IMF urged Japan to promote labor market reform by addressing the wage gap between regular and nonregular employees, as well as boosting participation in the labor force by female, elderly and foreign workers.
"The ambitious targets of Abenomics — consumer price inflation at 2 percent, real gross domestic product growth at 2 percent and a primary budget balance by 2020 — remain out of reach under current policies," the IMF said in its annual review of Japan's economy.