2023-11-02 12:59:08
Tokyo (AFP) – Japanese Prime Minister Fumio Kishida unveiled on Thursday a plan to support the Japanese economy of more than 100 billion euros, in order to alleviate the effects of inflation on the population and try to re-inflate his popularity rating.
Published on: 02/11/2023 – 1:59 p.m. Modified on: 02/11/2023 – 1:57 p.m.
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“We see that the vicious circle of deflation, symbolized by low prices and wages and weak growth, is being reversed,” said Mr. Kishida, estimating that “for the first time in 30 years, we are facing a tremendous opportunity to move to a new economic stage.”
However, “in the current situation where the rise in wages does not follow that of prices, it is necessary to temporarily support the disposable income of the Japanese in order to avoid a return to deflation,” he said.
The plan should be worth at least 17,000 billion yen (106.7 billion euros), Mr. Kishida said.
Japan, marked by decades of deflation, has suffered an acceleration in the rise in consumer prices since spring 2022, driven by the surge in energy prices following the outbreak of the war in Ukraine and the simultaneous fall yen.
Since the start of 2023, inflation has also been fueled by other expenditure items such as processed food products and services.
Tax cuts
The Bank of Japan (BoJ), isolated in its extremely accommodating monetary policy which contributed to lowering the yen, decided this week to maintain most of this policy, also believing that current inflation is not accompanied by a growth in wages, which would in turn fuel consumption.
Mr. Kishida, 66, whose management is criticized in the face of this price rise, has seen his popularity fall to its lowest level since his election in November 2021.
According to a certain number of observers, he might decide to call early elections to strengthen his stature in anticipation of an internal election in his Liberal Democratic Party (PLD), which promises to be complicated for him.
Mr. Kishida’s management is criticized in Japan in the face of rising prices © Richard A. Brooks / AFP/Archives
The measures he detailed Thursday evening during a press conference include tax reductions amounting to 40,000 yen (251 euros) per person and aid of 70,000 yen (439 euros) for low-income households. income.
He also pledged to urge businesses to raise wages next year to a higher level than this year.
The plan, which according to local media might represent a total of 37.4 trillion yen (237.7 billion euros) also including investments from the private sector, was approved Thursday by the government, which might submit as early as this month here to Parliament a draft supplementary budget intended to finance most of it.
It should also make it possible to extend measures to lower the price of gasoline and energy bills and to encourage investments in the field of semiconductors and the space industry.
Economist Hideo Kumano of the Dai-ichi Life research institute, however, said he was “skeptical” regarding the effects that Kishida’s measures might have on the economy or on the leader’s popularity.
Mr. Kishida oscillated between defending budgetary discipline and a desire to increase spending, Mr. Kumano told AFP.
“Those who opposed any tax increase did not support Mr. Kishida. Now those who opposed broad redistribution will move away,” he added.
Convincing the population promises to be difficult. “Everyday products have become more expensive and I have no choice but to look for cheap alternatives,” Masaharu Kashima, a 74-year-old Tokyo resident, told AFP, saying he had no hope a lot of this new plan.
“They already gave us 100,000 yen” during the pandemic, but that didn’t change anything,” he added.
These measures should also contribute to further deepening Japan’s finances while the level of its public debt is already the highest among major industrialized nations, currently standing at more than 260% of its GDP according to the International Monetary Fund.
© 2023 AFP
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