Japan can change the economic model
2023.01.16 06:49
Japan can change the economic model
By Ray Johnson
Budrigannews.com – The first round of special sessions held by the top economic policy panel of the Japanese government on Monday will discuss the direction of fiscal and monetary policies in the medium to long term, as well as the advantages and disadvantages of “Abenomics.”
Under former premier Shinzo Abe, Japan pursued a reflationary policy led by monetary stimulus that has helped pull the world’s No. three economies after fifteen years of deflation.
Despite the sharp rises in inflation, financial markets are now more concerned with when and if the central bank will reduce its monetary stimulus.
Economy Minister Shigeyuki Goto told reporters after the special sessions, “There’s a global economic trend of shifting towards new policy as seen in (U.S. Treasury Secretary Janet) Yellen’s calls for modern economic policy, which would mark a shift away from conventional supply-side economics.”
To reflect the discussions regarding the government’s annual economic policy blueprint, which is scheduled to be released in June, additional sessions will be held.
Goto stated that he would attend the meeting in Davos this week to reiterate Japan’s position that short-term economic recovery should take precedence over limiting medium- to long-term fiscal reform.
The meeting was attended by eight economists, one of whom was an authority on the country’s inflation trends.
Cabinet Office officials stated that the sessions do not intend to discuss the Bank of Japan’s exit strategy or draft new policy objectives to review a written mission statement from 2013 between the government and the central bank.
The disputed statement was made in January 2013, shortly after Abe took office. In it, the government pledged to implement structural reform, also known as the third arrow of Abenomics, as well as long-term fiscal reform, while the BOJ pledged to achieve a 2% inflation target as soon as possible.
The BOJ’s first two-day rate review of 2023 begins just one day before Monday’s session.
Financial markets have bet that the weakening yen, rising consumer prices, and increased government political pressure will eventually force the central bank to end its ultra-loose policy before Kuroda’s 10-year term ends in April.
The plan for the special CEFP sessions was announced by Prime Minister Fumio Kishida last month. He said that they would bring people together to talk about how to create a “virtuous cycle” of growth that could be reflected in the government’s annual mid-year policy blueprint.
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