Having completed his militarist plans, Japanese Prime Minister Shinzo Abe appears to have gone full fantasy-tard with his latest “plans” for the demographically-dead and debt-destroyed nation. “Creating a strong economy will continue to be my top priority,” Abe said, a goal he has stunningly under-achieved as Japan heads for its 5th recession in 4 years, but, as Bloomberg reports, it is his new “arrows” of economic hope that has left analysts scratching their heads – 20% economic growth (when its gone nowhere for years), a higher birth rate (as the aging of the nation accelerates and interest in sex plunges), and allegedly a goose that lays golden eggs (well why not?). The collapse of Abe’s approval says it all about his ‘plan’.
As Japan heads for a Quintuple Dip recession…
Abe proposes three new policy pillars without tying them to his previous plan. As Bloomberg reports, it has left analysts scratching their heads…
Speaking Thursday after his reappointment as leader of Japan’s ruling party, Abe unveiled three new “arrows” of his so-called Abenomics plan — a strong economy, child-care support and social security. When he took office in 2012, he had championed another trio — monetary stimulus, flexible fiscal policy and structural reforms.
But with the new policies sounding more like objectives rather than measures to achieve them, the risk is this fresh framework muddies his communication battle to encourage Japanese households and companies to spend rather than save.
“Investors like details, but all he’s done is announce targets,” said Mari Iwashita, chief market economist at SMBC Friend Securities Co. in Tokyo. “The growth strategy, one of the original three arrows, has branched off into three new arrows.”
Speaking to reporters Thursday, Abe avoided mentioning monetary or fiscal policy, as well as tricky regulatory reforms that many economists say are already too slow. Instead, he focused on his new three objectives:
- A strong economy, with a new gross domestic product target of 600 trillion yen ($5 trillion), up from the current 500 trillion yen. He gave no time-frame for achieving this goal.
- Increased support for families with children to help increase the fertility rate to 1.8 births per woman, up from 1.43 in 2013.
- Social security, including help for those who combine work and care for elderly relatives.
As The Wall Street Journal notes, however, while Japanese stocks have boomed, business spending and private consumption have remained anemic over the past year, indicating that neither businesses nor consumers have regained confidence in the long-term outlook for Japan’s economy.
Economists also point out that the goal could be seen as a repackaging of long-standing annual targets of 2% real growth and 2% inflation over the next five years.
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Abe said Thursday he would combat the demographic woes facing Japan, whose 127-million population is aging and shrinking, threatening its status as the world’s third-largest economy.
He certainly needs to do something…
“We will put the brakes on the trend toward an aging population and the falling number of children and keep the population at 100 million 50 years from now,” Abe said at party headquarters in Tokyo, without spelling out how this would be achieved.
Many economists and investors believe structural changes, or the “third arrow” of Abenomics, are key to unlocking robust growth in Japan. But they have mostly been disappointed that Mr. Abe hasn’t gone far enough in implementing those changes, and say he isn’t likely to pick too many fights before next year’s election.
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But it appears the public has finally begun to see through all the promises…
“His intention to tackle the demographic issue is good,” said Masamichi Adachi, senior economist at JP Morgan Securities Japan. “I’m totally in agreement with that.”
Even so, the former Bank of Japan official said that the growth target isn’t meaningful as Abe didn’t explain how, or even when, he hoped to achieve it.
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More hopes and dreams sold to an aging gullible public and supported by a Central Bank that is nearing its limit of asset-purchasing.