Japan announced on Thursday growth strategy priorities to promote green technology and digitalisation. This is part of efforts to strengthen the economy’s long-term growth. It will likely support any future stimulus package plans they may compile later this year.
Prime Minister Yoshihide Suga must win the coming elections to stay in his position and be able to pursue his policy initiatives.
The list included areas that need closer study in the coming months. Those were from a list of steps in Suga’s growth strategy that was unveiled in June.
Steps to expand production for electric car batteries and build more charging stations were included. Moreover, support to attract semiconductor plants in Japan, as well as steps for digital transformation of public services such as medical care.
Economy Minister Yasutoshi Nishimura told reporters that there are many items that could be included if there were to be discussions about an economic package in the future.
A rebound in export helped bolster Japan’s economy from last year’s pandemic-induced slump. Analysts, however, expect any further recovery to remain modest. This is due to the rising infections that hurt the country’s consumption.
The Japanese government plans to boost labour productivity and the participation rate. The government hopes to raise long-term growth by boosting labour productivity and the participation rate.
In the announcement, the government also called for stimulating innovation and digital transformation. Suga’s political standing, however, is wavering ahead of the elections.
BOJ Policy maker Warns of Growing Economic Recovery Risks
On Thursday, Bank of Japan board member Goushi Kataoka said that the coronavirus pandemic may weigh on the economy longer than initially expected, warning of heightened risks to the central bank’s forecast of a moderate, export-driven recovery.
He also stressed the central bank’s readiness to ramp up stimulus if needed. This is reinforcing market expectations that Japan would lag other countries in exiting crisis-mode policies.
Kataoka said, “given recent domestic and global economic developments, the need for bolder steps is heightening.”
Fumio Kishida, who is challenging Prime Minister Yoshihide Suga to become ruling party chief, said Japan must not fall behind other countries in supporting their economies with expansionary fiscal and monetary policies. With that, the country’s ultra-loose monetary policy will likely continue.
Kataoka said in a speech that Japan’s economic outlook was bound with uncertainty with consumption seen remaining in a severe state. He said this is due to state of emergency curbs to combat the pandemic.