IMF calls on Japan to revamp ‘Abenomics’ to boost flagging economic growth

IMF head Christine Lagarde says more needs to be done to get women into Japan’s male-dominated workforce

PUBLISHED : Thursday, 04 October, 2018, 7:10pm
UPDATED : Thursday, 04 October, 2018, 7:10pm

The head of the IMF on Thursday called for an overhaul of Japan’s economic policy, as the world’s third-biggest economy battles stubborn low inflation, sluggish growth and a rapidly ageing population.

Christine Lagarde called for a “fresh look” at “Abenomics”, the economic policy of Prime Minister Shinzo Abe, which combines ultra-loose monetary policy with fiscal stimulus and structural reforms.

“We believe that it will require a revamping of policies. The basic principles in our view are still valid but need to be broadened, sustained and accelerated,” said Lagarde.

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She warned that the economic challenges facing Japan will “only grow as Japan’s population continues to age and shrink,” noting that both the size of the economy and the population would contract by a quarter over the next 40 years.

The IMF predicted a growth rate of 1.1 per cent this year, declining to 0.9 next year in the former Asian powerhouse.

In the battle to get inflation above the Bank of Japan’s target of two per cent, Lagarde said prices would continue a “slow upward trend” but remain below this bar in the next few years. A leading advocate of women’s rights and one of the world’s most high-profile female figures, Lagarde also said “more could be done” to reduce the gender gap in Japan’s labour market.

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Abe has made getting more women into the workforce – so-called “Womenomics” – a central plank of his economic policy.

But he came under criticism after a cabinet reshuffle this week which left just one woman in a senior team of 25.

Lagarde noted that more women had been encouraged into the workforce but said: “I think that encouraging long-term employment for Japanese women would certainly be one of the responses to the challenges of the day.”

The IMF’s annual report on the Japanese economy suggested, among other measures to achieve this, “increasing availability of childcare and nursing facilities and reducing the gender wage gap.”

Japan, the world’s third-largest economy, ranked bottom among G7 countries in the World Economic Forum’s latest “Global Gender Gap Report”, coming 114th worldwide.

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It scored particularly poorly on women’s participation in the economy and political involvement.

Only 47 of the 465 members of parliament’s lower house are women, a ratio of 10.1 per cent that puts Japan behind Myanmar and Gambia in terms of female government representation, according to the Inter-Parliamentary Union.