GDPマイナス 景気の停滞を長引かせるな

The Yomiuri Shimbun
Govt must take all possible steps to end lull in economic recovery
GDPマイナス 景気の停滞を長引かせるな

The national economy has been on a path of mild recovery, but its prospects have turned uncertain.

The real-term gross domestic product for the April-June quarter declined 0.4 percent from the previous quarter for an annualized fall of 1.6 percent, according to preliminary figures released by the Cabinet Office, representing the first negative growth in three quarters.

The slump in personal consumption and exports is a major reason behind the poor economic performance. Plant and equipment investment, which holds the key to full-scale growth, also declined, albeit slightly, for the first time in three quarters. Some analysts have pointed out that Japan has entered a lull in its business recovery.

The important thing is not to let the lull drag on. The government and the Bank of Japan must closely examine possible risky factors and do what it takes to prevent business from losing its steam.

Private consumption — the pillar of domestic demand — dropped by 0.8 percent in the April-June period, compared with the previous quarter, marking the first quarterly fall since the April-June quarter of last year, when personal consumption plunged due to the impact of the consumption tax hike to 8 percent.

Economic revitalization minister Akira Amari cited the light vehicle tax hike and unseasonable weather as reasons for the shrinkage of consumption, indicating that the decline was “caused largely by temporary factors.”

But it must be noted that the benefits of wage hikes have been offset by the continued rise in prices of food and other products, a consequence of high raw material prices amid the yen’s weakening. It is certain that households have become more budget-minded. Perhaps consumers have yet to break away from the bearish mind-set ingrained during long years of deflation.

Excessive pessimism is unwarranted, but the government must analyze factors behind slack consumption from a multifaceted viewpoint and work out improvement measures.

Alarming overseas factors

A more alarming factor is the slowdown of overseas economies. It is necessary to keep a close watch especially on the volatile Chinese economy.

China has posted a conspicuous slowdown of such economic indicators as industrial production and construction investment. Affected by this, the growth in emerging Asian countries has begun to slacken. The dull overseas demand, centering on China, has been dampening Japan’s exports.

Given that the People’s Bank of China devalued the yuan on three consecutive days last week, many market dealers concluded that the Chinese economy has been worsening more seriously than expected. A loss of steam in China’s growth would have a big impact on the world economy.

Some point out that an increase of interest rates in the United States, which can be expected within this year, will trigger outflows of a huge amount of funds from emerging economies. Thus, the uncertainties in economic prospects have been increasing.

To survive economic disturbances that originate overseas, the Japanese economy’s fundamental power of growth must be urgently augmented.

It is also essential to enhance the motivation and vigor of the private sector. We suggest that the government expedite the implementation of growth strategies, including promotion of plant and equipment investment that will improve productivity and deregulation that can help expand growth industries.

It is right for the government to aim for a virtuous circle in which corporate profits are passed on to workers in the form of wage hikes and this leads to expanded consumption. To ensure this is realized, the government should steadily carry out measures that can deepen this dimension of the Abenomics economic policy package.

(From The Yomiuri Shimbun, Aug. 18, 2015)

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