Huitong.com, August 18 - Etsuro Honda, economic adviser to Japanese Prime Minister Shinzo Abe, said on Tuesday (August 18) that Japan needs about 3.5 trillion yen to boost its domestic demand and avoid further economic contraction. Moreover, Japan's household income has gradually declined, which is also the consequence of the previous increase in consumption tax by the Abe government. Japan's wage growth was lower than expected, and food prices and daily necessities prices are rising.
Japan's third largest economy, the world's third largest economy, shrank by 1.6% in the past three months, as household and business spending decreased and exports fell. But weak yen and unprecedented monetary stimulus from the Bank of Japan also pushed the country's stock market to eight-year highs, but despite this, the country's consumer confidence index has declined.
Honda said that in order to help low-income families and people who receive pensions, the Japanese government needs to invest 3-3.5 trillion yen. At the same time, he also said that these investments should be paid in the form of subsidies such as child care and coupons, rather than for public utilities. In addition, higher taxes than expected could also provide funding for additional indications rather than issuing new government bonds.
Japanese Economic and Finance Minister Akira Amari said on Monday (August 17) that he will not use fiscal measures to stimulate the economy.
Bank of Japan Governor Haruhiko Kuroda said Japan will be able to signal to achieve its 2% inflation target due to its unprecedented loose monetary policy.
But Honda said that fiscal policy will now be more effective than the Bank of Japan's loose monetary policy, because the effect of fiscal policy is faster, but it does not rule out the possibility of a decline in inflation expectations later. We should be more vigilant about this, because it is not impossible for the Bank of Japan to implement a new round of loose monetary policy.
Honda Yuerong is a former Japanese Minister of Economic Affairs and Finance. He and Abe met at a wedding banquet 30 years ago. They often play golf together on weekends. The copyright of the content of
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