Japanese Prime Minister Shinzo Abe Details Final Prong of ‘Abenomics,' Supplying Details Of Ambitious Plan To Break Economy's Deflationary Cycle

 @natrudy
on June 05 2013 9:04 AM
Shinzo Abe
Japan's Prime Minister Shinzo Abe delivers a speech at a dinner during the 19th International Conference on "The Future of Asia" in Tokyo, May 23, 2013. Reuters

Japanese Prime Minister Shinzo Abe outlined a set of economic goals but left out specific details in a major policy speech in Tokyo Wednesday that provided more perspective on his ambitious fiscal and monetary priorities, dubbed “Abenomics."

He pledged to raise incomes by 3 percent annually, establish special economic zones to attract businesses and study whether public pension funds should be used to buy equities, reports Reuters.

Other goals he established included tripling public-private partnerships in infrastructure financing and upping the number of women in the workforce, according to the Wall Street Journal’s MarketWatch.

But economists and traders were not too keen on Abe’s remarks, with several describing the speech as vague and disappointing.

“The government has come up with rosy numerical targets, but I doubt any of these could be met or that such a targeting policy could work out as planned,” said Hideo Kumano, a chief economist at the Dai-Ichi Life Research Institute, in an interview with Reuters.

Tokyo share prices tumbled 3.8 percent by the close of the trading day, amid disappointment at the speech, reports MarketWatch.

Japan’s economy has remained stagnant for much of the past two decades, with public debt rising steadily, right up to a recent high-water mark of 200 percent of the country’s GDP, according to a recent OECD survey.

Prices have remained in deflation for 15 years, according to the OECD, prompting Abe to call for an ambitious 2 percent annual inflation target.

Abe’s other two prongs of ‘Abenomics’, detailed in recent months, include sizeable government stimulus spending and aggressive quantitative easing, or money printing.

“For 20 long years, Japan suffered a deep loss of confidence,” Abe said, according to the New York Times. “It is now time for Japan to become an engine of global economic growth. 

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