Finance Minister Taro Aso on Monday pledged to put Japan on a path of sustainable growth driven by the private sector by increasing productivity and revitalizing the world’s third-largest economy even as its population rapidly grays.
In a speech at the Diet’s first session of 2020, Aso also underscored the importance of ensuring fiscal health so the government can build a social security system that will benefit all generations.
In addition, he vowed to redouble efforts to achieve a primary balance surplus by fiscal 2025 and improve the government’s debt-to-gross domestic product ratio, which is the worst among advanced countries.
Referring to the large stimulus package Prime Minister Shinzo Abe’s Cabinet approved last month, Aso said its aim was to “bring about sustainable and private sector-driven economic growth through the strengthening of productivity and the growth power of the Japanese economy.”
Stimulus steps involving some ¥13 trillion are designed to “accelerate restoration and recovery from natural disasters and steadily overcome downside risks to the economy,” he said, referring to the typhoons and torrential rain that hit the archipelago last year.
The economy is still in a “moderate recovery” spurred by domestic demand, Aso said, citing improvements in employment, income and corporate earnings.
But Aso, who doubles as deputy prime minister, acknowledged that “various uncertainties,” such as trade tensions between the United States and China, present risk factors to an otherwise solid economy.
To achieve sustainable growth, Aso asked his fellow lawmakers to swiftly enact the fiscal 2020 state budget and a supplementary budget for fiscal 2019, which will close at the end of March.
The record ¥102.66 trillion budget for 2020 features ¥1.67 trillion for social security, ¥1.78 trillion for steps to offset the impact of the October tax hike, and steps to bolster the country against natural disasters.
The tax rose 2 points to 10 percent, completing the plan to double it from 5 percent in 2012. The proceeds are expected to cover the increase in social security spending.
In a separate speech, Yasutoshi Nishimura, minister for economic and fiscal policy, said he was determined to push ahead with the “digital new deal” as a national strategy.
Nishimura called for “investment for the future” and reviews of existing systems to spur innovation for the development of post-5G communications networks, quantum technology and artificial intelligence as a means to achieving the “smartization” of industries and lives.
He also stressed the importance of fostering talent that will further innovation, pledging to create an environment in which every student has an information technology device and is able to make full use of it.
Nishimura said it will be vital for Japan, with its dwindling population, to actively take in foreign demand through free trade agreements, such as the bilateral deal with the U.S., the FTA with the European Union, and the 11-member regional FTA that became the revised Trans-Pacific Partnership.
Such arrangements “create major chances for small and midsize companies with high technology skills, as well as agriculture, forestry and fisheries industries that have produced safe and delicious foods,” he said.
Nishimura said Japan will play a “leading role” in expanding the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, as the TPP is formally known.