Editorial
Gov't urged to implement economic policies to boost consumer confidence
Japan's real-term gross domestic product (GDP) in the July-September period grew at an annualized rate of 4.8 percent from the April-June period, according to preliminary figures released by the Cabinet Office. This represents positive growth for the second consecutive quarter.
The economic crisis triggered by the collapse of U.S. financial giant Lehman Brothers, which was called an economic crisis that "occurs only once every 100 years," appears to be nearing an end after an unexpectedly short period of time without dealing a fatal blow to Japan's economy. The government should be applauded for preventing the economy from freefalling by implementing various policy measures, including those worked out by the previous administration.
The growth rate in the July-September quarter was also higher than the average forecast made by economists of around 2.5 percent.
Among external demand, exports remain brisk. For domestic demand, consumer spending and corporate investment in plants and equipment turned out to be better than expected thanks to the government's eco-point system that encouraged consumers to buy environment-friendly cars and electric appliances.
However, the effects of economic stimulus measures started to decline. Share prices are not as bullish as their peak, while the unemployment rate remains high. Moreover, the average winter bonus to be paid by major companies to their employees is estimated to decline at a record high rate from the previous year. Everybody apparently has a sense of uncertainty about the economic outlook and is worried about their future livelihoods.
Economic growth will likely slow down in the foreseeable future and the quarterly economy period may post negative growth. However, it is impossible to keep implementing new economic stimulus measures one after another from a short-term perspective. In working out a second supplementary budget for fiscal 2009, the government is urged to invest precious taxpayers' money in employment security measures and those aimed at supporting people's livelihoods as well as other measures. Households would benefit from such steps taken from a mid- and long-term perspective.
The compilation of the fiscal 2010 state budget draft, which will get under way toward the end of this year, and discussions on tax system reform for next fiscal year will also be vital. The Japanese economy needs not only technological innovation and an increase in productivity but also hope and a sense of reassurance for the future of people's livelihoods. Such hope and a sense of reassurance would result in consumer spending, which would in turn reactivate the economy.
The public is trying to gauge how serious the new administration of Prime Minister Yukio Hatoyama is about making good use of taxpayers' money for their livelihoods in working out the fiscal 2010 budget draft and redistributing people's wealth through tax system reform.
Stock traders who are reacting nervously to the fluctuation of share prices on a day-by-day basis are also paying close attention to the government's seriousness in implementing such policy measures.
Such efforts would be of great significance as economic stimulus measures if they gain confidence and sympathy from the public. These measures could also be effective in preventing deflation, which is often caused by people worrying more.
In that sense, Economy, Trade and Industry Minister Masayuki Naoshima badly damaged the public's confidence by revealing the GDP growth rate in the July-September period before it was officially announced.
He said, "I didn't know when the embargo would be lifted." However, it is not just a simple mistake but raises questions about whether he is qualified to serve as an economic minister. He should deeply reflect on his actions, and the government as a whole should take the issue seriously.
(Mainichi Japan) November 17, 2009