TOKYO: Japan’s Cabinet on Friday rubber-stamped a package of government reforms aimed at rebooting the economy, as Prime Minister Shinzo Abe readied to explain the measures to fellow Group of Eight (G8) leaders.
In a video message posted on his official website, the Premier repeated pledges that he would make a tangible difference to Japan’s prospects after years of disappointing growth and debilitating deflation.
“I will restore a strong economy. I pledge to increase the per-capita gross national income by no less than 1.5 million yen [$15,000] over the next ten years,” he said.
The drive to jumpstart the world’s third-largest economy has been the dominant theme of the administration, in a program of measures dubbed “Abenomics.”
The first two strands—or “arrows”—came in the form of massive public spending and a torrent of easy money from the central bank.
That drove the yen down and boosted the stock market, which climbed around 80 percent, until the last few perilous weeks that have been marked by wild swings, including a 6.35-percent drop on Thursday.
The architecture of the third “arrow” was unveiled last week, a laundry list of aims including 2-percent gross domestic product growth a year, boosting female participation in the workforce, and an expansion of infrastructure exports.
“I would like women to be more active in society,” Abe said in the video posted on Friday morning after his Cabinet endorsed the program.
“A society in which women shine is the core of my growth strategy,” he said, pledging to eliminate childcare waiting lists and to promote three-year childcare leave,” he said.
“We will press forward in bringing about structural reforms in agriculture . . . and [with]an export strategy, thereby doubling the income of farmers and farming communities” over the next decade, Abe added.
The premier is also pledging to create special economic zones that will reduce red tape for businesses and offer tax breaks for firms that are investing.
The proposals, which come just over a month ahead of upper house elections, have been criticized as lacking detail, with some commentators pointing to volatile stock trading as evidence that the moneymen are unimpressed.
“The evaluation by the market is that the growth strategy lacks details” said Kyohei Morita, chief economist at Barclays.
“What’s important from the market’s viewpoint is to demonstrate that corporate Japan will be able to change,” he said.
“In other words, there are three key areas: reforms in Japan’s rigid labor market, reduction in the corporate tax rate, and creating a level playing field in conditions for cross-border trade in Asia and the world,” Morita added.
The economist further noted that Japan’s decision to join talks on the ambitious Trans-Pacific Partnership free trade deal is progress, but added creating a more flexible labor market was key.
Abe heads to Poland on Saturday for a meeting with central European counterparts, before the Group of Eight summit in Northern Ireland from Monday.
Fellow leaders are expected to quiz him on the details of Abenomics amid concerns in some camps that Tokyo is deliberately driving down the value of its currency to give its exporters a competitive edge.
Abe’s high approval ratings and the big spending side of the policy will also attract interest at a time of grinding austerity and political disaffection in several developed economies.