On the Present State of the Japanese Economy Motoshige ITOH - - PowerPoint PPT Presentation

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On the Present State of the Japanese Economy Motoshige ITOH - - PowerPoint PPT Presentation

Aug 30, 2022 277 likes •494 views

On the Present State of the Japanese Economy Motoshige ITOH Council on Economic and Fiscal Policy, Japan Gakusyuin University Japans nominal GDP: recovery process under Abenomics 1 Nominal GDP of Japan; revised data revised data original

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Motoshige ITOH

Council on Economic and Fiscal Policy, Japan

Gakusyuin University

On the Present State of the Japanese Economy

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Japan’s nominal GDP: recovery process under Abenomics

1

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SLIDE 3

2

revised data

  • riginal data

Nominal GDP of Japan; revised data

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Expanding money balance

10 20 30 40 50 60 70 80

Monetary Base

US Euro Area UK Japan

（％、GDP ratio）

3

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SLIDE 5

4

CPI inflation rate excluding energy prices and fresh foods Inflation rate Three month moving average

Shifting trend of inflation rate

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◆ Three arrows of monetary stimulus, flexible fiscal policy, and structural reforms are required. ◆Fiscal Stimulus which complements monetary policy plays an essential role under the current situation. ◆ Quality investment and expenditure to boost potential demand are keys.

5

Necessary Policy Coordination

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SLIDE 7

Ratio of Current profit to sales

6

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SLIDE 8

Trends of unemployment rate and job-offer job-seeker ratio

7

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SLIDE 9

8

Return of deflation?

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SLIDE 10

9

Growth rate of world GDP and world export; world economic trend is against Abenomics

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◆ Lack of Demand ◆ Legacy of the Global Financial Crisis ◆ Demographic changes such as ageing ◆ Slowdown in innovation and technological diffusion

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Secular Stagnation?

  • 5
  • 4
  • 3
  • 2
  • 1

1 2 3

Output Gap of G7 countries

5 10 15 20 25 30 35 40

Share of older population

Japan US Germany France UK Italy Canada

(Source) IMF, World Economic Outlook Database Apr 2016 (Source)United Nations, World Population Prospects, the 2015 Revision

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Sluggshi innovation: TFP has been very low since 1980s

11

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Low interest of major countries

1 2 3 4 5 6 7 US Euro Area UK Japan (％）

Policy Rates

12

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13

growth rate seasonally adjusted Whole world Industrial nations emerging nations

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Trump effects; long-term interest rate German 10 year bond USA 10 year bond JGB 10 year US election

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Most recent yield( middle of February 2017)

duration (year) JGB yield curve

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◆ decreasing budget deficit

achieving primary balance surplus by 2020

◆preparing for aging population

social security reforms

◆ lowering the level of public debt

budget surplus and nominal GDP growth mild inflation?

16

Three aspects of fiscal consolidation

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SLIDE 18

17

  • 6.3
  • 5.5
  • 3.0

半減目標

  • 10.0
  • 8.0
  • 6.0
  • 4.0
  • 2.0

0.0 2.0 2005 07 09 11 13 15 （％） （年度）

Primary fiscal balance

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◆ Corporate Governance Reform ◆ Pro-growth corporate tax reform ◆ EPA(FTA) and agricultural reform ◆ Expansion of private participation in public services (PPP, PFI) ◆ Increased labor participation of women and elderly people

18

Abenomics in Progress: Growth Strategy

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１．Realizing Productivity Revolution

  • The 4th Industrial Revolution
  • Regulatory reform

２．Increasing investment in new growth areas

  • Environment (Investment in energy saving, renewable and

alternative sources)

  • Healthcare, medical and other senior market
  • Education, human resource development

３．Mitigating the impacts of labor force decline

  • Further active participation of women and the elderly
  • Utilization of foreign human resources
  • Labor market reform

19

Acceleration of Growth Strategy