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▼ Hamada: Speed Up Structural Reforms To Boost Abenomics
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The Yomiuri Shimbun
The Japanese economy continues to recover steadily due to the effects of the Abenomics economic policies such as monetary easing by the Bank of Japan and other stimulus policies, Special Adviser to the Cabinet Koichi Hamada said.
During an interview with The Yomiuri Shimbun, Hamada, one of the brains behind the economic policies of Prime Minister Shinzo Abe, stressed the need to speed up structural reform to improve the productivity of small and midsized companies, agricultural businesses and others.
Since the start of the New Year, stock prices have been falling worldwide due to concerns over the health of the Chinese economy. But we don’t have to react with undue hope or despair to ups and downs in the stock prices.
When looking at the economic situation from medium- and long-term perspectives, the nation’s real economy takes a turn for the better due to the effects of Abenomics. Corporate performances continue to achieve better results, the jobless rate has improved, and the employment situation is favorable — suggesting that there is no bearish factor about the Japanese economy.
The decline in oil prices, which is another factor behind falling stock prices, is considered positive in the sense that the amount of money people can use increases in real terms. However, the potential growth rate [which indicates how much a country can increase gross domestic product in the medium- and long-term] cannot be raised only through monetary easing by the Bank of Japan. From here on, the government should move ahead with structural reforms from a different perspective.
In measures for small and midsize companies, the government has so far prioritized and implemented policies to prevent such companies from bankruptcy. However, this has not led to increased productivity. I think one option is to carry out reform predominantly among limited principal enterprises. Experts in other countries think Japan needs to improve its productivity in the agricultural, energy-related and retail sectors for the economic growth of the nation.
Partly due to the decline in oil prices, we are unable to say at present that Japan will be able to completely emerge from deflation by the end of this year. Concerning the hike in the consumption tax rate to 10 percent scheduled for April 2017, we should make a careful judgment while carefully watching economic situations. Greater profitability vital
By Hiroyuki Tanaka / Yomiuri Shimbun Staff Writer
In the interview, Hamada stressed that the government needs to work on fundamental structural reform without being swayed by price movements of financial markets. Of the “three arrows” of the Abenomics economic policy package, the growth strategy has yet to yield a conspicuous result. The government’s growth strategy has not yet fully worked to fight a decline in the potential growth rate due to the declining population.
Temporary economic measures such as a program to pay benefits to people cannot improve the Japanese economy. Hamada also takes a negative stance toward public spending on economic pump-priming measures. A steady approach to improve productivity is necessary through reforms of the agricultural and medical sectors as well as the labor market.
■ Profile of Koichi Hamada
Before assuming the post of special adviser to the Cabinet in December 2012, Hamada, 80, was a professor at the University of Tokyo, and head of the Economic and Social Research Institute of the Cabinet Office. He is also a professor emeritus at Yale University. A book coauthored with Nobel Prize-winning economist Paul Krugman, “2020 Sekai Keizai no Shosha to Haisha” (Winners and losers in the global economy in 2020), will be published by Kodansha Ltd. on Jan. 25.
The Japanese economy continues to recover steadily due to the effects of the Abenomics economic policies such as monetary easing by the Bank of Japan and other stimulus policies, Special Adviser to the Cabinet Koichi Hamada said.
During an interview with The Yomiuri Shimbun, Hamada, one of the brains behind the economic policies of Prime Minister Shinzo Abe, stressed the need to speed up structural reform to improve the productivity of small and midsized companies, agricultural businesses and others.
Since the start of the New Year, stock prices have been falling worldwide due to concerns over the health of the Chinese economy. But we don’t have to react with undue hope or despair to ups and downs in the stock prices.
When looking at the economic situation from medium- and long-term perspectives, the nation’s real economy takes a turn for the better due to the effects of Abenomics. Corporate performances continue to achieve better results, the jobless rate has improved, and the employment situation is favorable — suggesting that there is no bearish factor about the Japanese economy.
The decline in oil prices, which is another factor behind falling stock prices, is considered positive in the sense that the amount of money people can use increases in real terms. However, the potential growth rate [which indicates how much a country can increase gross domestic product in the medium- and long-term] cannot be raised only through monetary easing by the Bank of Japan. From here on, the government should move ahead with structural reforms from a different perspective.
In measures for small and midsize companies, the government has so far prioritized and implemented policies to prevent such companies from bankruptcy. However, this has not led to increased productivity. I think one option is to carry out reform predominantly among limited principal enterprises. Experts in other countries think Japan needs to improve its productivity in the agricultural, energy-related and retail sectors for the economic growth of the nation.
Partly due to the decline in oil prices, we are unable to say at present that Japan will be able to completely emerge from deflation by the end of this year. Concerning the hike in the consumption tax rate to 10 percent scheduled for April 2017, we should make a careful judgment while carefully watching economic situations. Greater profitability vital
By Hiroyuki Tanaka / Yomiuri Shimbun Staff Writer
In the interview, Hamada stressed that the government needs to work on fundamental structural reform without being swayed by price movements of financial markets. Of the “three arrows” of the Abenomics economic policy package, the growth strategy has yet to yield a conspicuous result. The government’s growth strategy has not yet fully worked to fight a decline in the potential growth rate due to the declining population.
Temporary economic measures such as a program to pay benefits to people cannot improve the Japanese economy. Hamada also takes a negative stance toward public spending on economic pump-priming measures. A steady approach to improve productivity is necessary through reforms of the agricultural and medical sectors as well as the labor market.
■ Profile of Koichi Hamada
Before assuming the post of special adviser to the Cabinet in December 2012, Hamada, 80, was a professor at the University of Tokyo, and head of the Economic and Social Research Institute of the Cabinet Office. He is also a professor emeritus at Yale University. A book coauthored with Nobel Prize-winning economist Paul Krugman, “2020 Sekai Keizai no Shosha to Haisha” (Winners and losers in the global economy in 2020), will be published by Kodansha Ltd. on Jan. 25.
- January 19, 2016
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