The government on Wednesday announced a basic policy for its economic growth strategy through fiscal 2020. Envisioned is average economic growth of 3 percent in nominal terms and 2 percent in real terms in the coming decade, plus a reduction in the unemployment rate from the current 5 percent level to around 3 percent in four years.
However, the economic reality is harsh. In November, the unemployment rate went up for the first time in four months, to 5.2 percent. The government’s economic outlook for fiscal 2010 shows that unemployment will remain at 5.3 percent and deflation will continue, although the economy is forecast to grow 1.4 percent in real terms, the first positive growth in three years.
A recent government survey shows that ordinary citizens such as taxi drivers and shop managers feel that the economy has been rapidly deteriorating in the past three months due to small winter bonuses and the bad employment situation.
The basic policy for growth attaches importance to creating new demand by assisting the energy, environmental protection, medicine and nursing care sectors. This suggests a government view that supply-side economics of the past centered on assistance to the manufacturing sector has failed to bring economic rewards to people. The government plans to develop a new index to gauge people’s happiness.
The policy aims to create 1.4 million new jobs in the environmental and energy sectors, 2.8 million new jobs in the medical, nursing care and health sectors, and 560,000 new jobs in tourism and regional revitalization; and to raise Japan’s food self-sufficiency to 50 percent.
The policy also calls for Japan’s stepped-up assistance in infrastructure improvement in other Asian countries, creation of an Asia-Pacific free trade area and cuts in the world’s greenhouse-gas emissions by more than 1.3 billion tons — equivalent to Japan’s emissions — through the application of Japanese technologies. This approach will likely help increase Japanese exports at a time when rapid expansion of domestic demand is unlikely due to the dwindling population.
The government should flesh out the basic policy with the backing of funds as soon as possible.
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