Abenomics describes the plans of Japanese Prime Minister Shinzo Abe to revive growth in the world’s third largest economy, which is struggling to find traction under the impact of a strong yen and stubborn deflation.
Japan's Prime Minister Shinzo Abe to move ahead with economic reforms
Japanese PM tells top business leaders that his three-pronged strategy is starting to bear fruit
Japanese Prime Minister Shinzo Abe, struggling to extricate his country from two decades of stagnation, has pledged to move ahead with reforms he has promised as part of his "Abenomics" economic strategy.
Speaking to Asia's top corporate executives yesterday at the CEO Summit, a meeting of big business held in parallel with the annual summit of Pacific Rim leaders in Bali, Abe said that through his three-pronged strategy to revive the economy, he has succeeded in "breaking through the mentality of economic stagnation that had been permeating Japan".
Japan is wrestling with the developed world's heaviest debt burden, inflated by years of ineffective efforts to stimulate the economy through spending and soaring welfare costs in a rapidly-ageing society.
The Japanese leader singled out his move to raise the consumption tax rate from 5 per cent to 8 per cent from April 1 next year. Abe has also unveiled a 5 trillion yen (HK$397 billion) spending package aimed at softening the blow from the tax increases.
The increase is seen as crucial to shrinking the country's huge national debt and marks a major political gamble for Abe, with previous tax rises having led to the downfall of his predecessors.
"It's not easy for a country stuck in deflation for 15 years to get out," Abe said.
He promised measures to ensure that an increase in Japan's sales tax, which has driven consumer confidence to record lows, does not derail the economic recovery he has nurtured since taking office last December.
"Now we can wipe out the doom and gloom atmosphere in the Japanese economy," Abe said.
But he made no mention of reforms to the country's labour market, a day after conceding in an interview with the Financial Times that attempting to remove stringent job protections - a step that could make Japanese companies more attractive for foreign investment - may prove difficult.
"When it comes to redundancies, Japanese people are very sensitive," he told the newspaper. "To gain people's understanding will require more careful explanation than for other reforms."
Abe yesterday also sought to reassure other Asian countries, especially those that suffered colonisation and invasion before and during the second world war, over Japan's efforts to upgrade its military.
"We are aspiring to become a pro-active contributor to stability and security in the world as a country that observes international norms," Abe said.
The reference to international norms also appeared aimed at China, whose naval incursions into waters near disputed islands in the East China Sea have angered Japan. Relations between the two biggest Asian economies remain chilly with scant sign either is willing to compromise on the islands issue.
Associated Press, Agence France-Presse