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Graying Japan Seeks Balanced Growth
World Economy

Graying Japan Seeks Balanced Growth

Japan will seek to achieve a balanced economic expansion by setting in motion a virtuous cycle of growth and distribution, Finance Minister Taro Aso said Friday, as he called for swift Diet passage of the country’s budget plans.
In his fiscal policy speech delivered to parliament, Aso pledged to improve the country’s child-rearing and nursing care environment so an aging Japan, with a low birthrate, can survive and boost its potential growth, Kyodo reported.
“It is important to enact the budget and relevant bills as soon as possible (to achieve balanced growth),” Aso said on the first day of a 150-day regular Diet session.
“We will accelerate ‘Abenomics’ further by fully deploying monetary and fiscal policies, and structural reform to ensure a virtuous economic cycle,” Aso said, referring to Prime Minister Shinzo Abe’s economic policy mix. Japan faces the difficult task of achieving economic growth and fiscal rehabilitation at the same time.
Aso said the government will maintain its target of turning the primary balance into a surplus by fiscal 2020, although he did not mention the country’s delayed sales tax hike to 10%, currently planned for October 2019.
With a deficit in its primary balance, a country cannot finance its annual budget—excluding debt-servicing costs—without issuing new bonds.
Restoring its fiscal health, the worst among developed countries, is a priority for Japan, at a time when the graying of its population is expected to increase already swelling social security costs and make it difficult to rein in total spending.
Spending on social security accounts for roughly a third of the total expenditure under the 97.45 trillion yen ($850 billion) budget plan for fiscal 2017, submitted Friday to the Diet.
The budget also features defense spending that has increased for the fifth straight year since Abe took office and money to rejuvenate the deflation-mired economy by investing in growth areas.
The government is also seeking passage of a 622.5 billion yen extra budget for fiscal 2016 through March, with funds earmarked to rebuild areas hit by powerful earthquakes and typhoons in 2016.
Based on an estimate approved Friday by the cabinet, the world’s third-largest economy will likely grow a real 1.5%, even as many private-sector economists see spending by consumers and companies as lacking strength.
Economic and Fiscal Policy Minister Nobuteru Ishihara said in his policy speech the same day that the economy has been “recovering moderately”, but the country needs to be vigilant amid uncertainty surrounding overseas economies and volatility in financial markets.

 

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