Factbox-Key economic policy stances of Japan’s next PM candidates By Reuters
© Reuters. FILEPHOTO Fumio Kishida (Japan’s Liberal Democratic Party lawmaker and former foreign secretary) announces that he will be running for president of the party at a Tokyo news conference on August 26th, 2021. REUTERS/Issei Kato
(Reuters) -Candidates to become Japan’s next prime minister officially launched their campaigns on Friday, with popular vaccine minister Taro Kono expected to be the top contender to replace Yoshihide Suga.
Below are key economic policy stances of the candidates running in the ruling party’s leadership race:
Having served as minister in charge of deregulation, Kono calls for targeted spending on growth areas like renewable energy and expansion of 5G networks nationwide.
Kono declined to discuss the cost of the new relief package that would be needed to mitigate the effects from the coronavirus outbreak, but he stressed the importance of filling Japan’s 22 trillion-yen ($200billion output gap).
Kono criticized former prime minister Shinzo Abe’s Abenomics policies as failing to provide wealth for households and suggested tax incentives for companies who increase their wages.
Kono has also decided to distance himself from Abenomics’ first arrow – bold monetary easing. He called on 2017 Bank of Japan for clearer communication regarding an exit strategy.
Recently, he has reversed his position and said that current monetary policy should remain flexible in view of the impact the pandemic is having on the economy.
Kono said that it wasn’t possible to stick to the BOJ 2% target for price, and it was difficult to reach. The central bank needs to communicate with the market about its future monetary policy.
A former foreign minister with experience as a banker, Kishida had previously said if he were to become leader, fiscal consolidation would be a major pillar of policy.
Kishida also expressed concern about the BOJ’s incredibly loose monetary policies, saying that in 2018, stimulus can not last forever.
Kishida proposed spending packages of over 30 trillion Japanese yen, as the economy is suffering due to the pandemic.
In contrast to Abenomics, which focuses on corporate profits and hoping that the benefits eventually trickle down onto wage-earners, he stressed the importance of distributing more wealth to households.
A former internal affairs minister and a close associate of Abe, Takaichi has said she would carry over a remodelled version of Abenomics – making her policy proposal the most reflationist among the candidates.
Takaichi refers to her economic vision under “Sanaenomics” and says Japan should set a budget goal of balancing until inflation reaches the central bank’s target of 2%. This will ensure that fiscal as well as monetary policy are expansionary.
Takaichi explained that Sanaenomics includes three pillars: fiscal spending, bold monetary ease and crisis-control investments. To achieve our 2% inflation target, we’ll mobilize them all.
Japan needs to issue more bonds, she said. Japan doesn’t need to be worried about its debt defaulting due to the central bank’s inability to print money.
She stated in a policy speech that “the current ultra-low rate environment allows us to take bold (fiscal), measures.”
Seen as a long shot, Noda has offered few clues on her stance on economic policy including on whether Japan needs bolder fiscal and monetary support.
Noda stated that Japan should focus on the problem of a shrinking population. This “deals an enormous blow to Japan’s economy,” she said in a speech.
Noda stated that “we need a growth plan that puts children in the center” and suggested issuing “children bonds”, to help finance steps that will support child-bearing.
Noda said that the immediate focus should be to provide faster medical assistance for COVID-19 victims and financial aid including cash payments for all Japanese workers.
($1 = 109.8900 yen)