Prime Minister Shinzo Abe’s newly appointed regional revitalization minister, Kozo Yamamoto, has argued that the leader’s Abenomics economic policy mix has not plateaued but is merely returning to its original form, one that combines financial and fiscal measures.
Last month, Abe compiled an economic stimulus package totaling ¥28.1 trillion, including government loans to private businesses and fiscal spending by local governments for public works projects.
Many economists believe Abe is now shifting more to fiscal measures as the Bank of Japan’s ultraloose monetary easing, the centerpiece of his Abenomics polices, appears to be reaching its limit.
“Bank of Japan Gov. (Haruhiko) Kuroda has said there is no such limit,” Yamamoto argued during a recent group interview with media outlets. “I hope (the BOJ) will firmly carry out its mission.”
Yamamoto is a close ally of Abe’s and one of the key minds behind Abenomics.
“Abenomics has the first and second arrows, which are monetary measures and fiscal spending. These two arrows should go in the same direction,” Yamamoto said.
Abe’s Cabinet, which hiked the consumption tax from 5 percent to 8 percent in April 2014, once appeared to push for policies that curbed demand in the economy, Yamamoto said.
But now the Cabinet is back on the right track, boosting fiscal spending again and thereby increasing demand in the economy, Yamamoto said.
“Demand has particularly felt insufficient in rural areas,” he said. “It’s very important to spread demand in those areas by boosting fiscal spending.”
Yamamoto, a former Finance Ministry bureaucrat and a longtime friend of Abe’s, helped the prime minister craft his collection of economic policies centered on the BOJ’s ultraloose monetary easing before Abe rose to power in December 2012.
Yamamoto serves concurrently as a minister in charge of administrative reforms.
During the interview, he said he will review and possibly consolidate various economic indicators separately created by a number of ministries, including those necessary for calculating Japan’s gross domestic product.
“Some economic statistics for gross domestic product are difficult to understand, Yamamoto said. “In particular, the GDP deflator is among them.”
The GDP deflator is a price index that measures inflation or deflation in an economy by calculating a ratio of nominal GDP to real GDP.
Yamamoto said that Japan does not have proper indicators to measure productivity by industry, a problem that has made it difficult for the government to draw up growth strategies for each industrial sector.
“I want to tackle (reviewing indicators) as party of administrative reforms,” he said.
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