TOKYO, 11th June, 2024 (WAM) -- The Japanese government will deploy "all possible tools" to ensure sustained wage growth as the country is now on the cusp of finally breaking with deflation and entering a new stage, a draft of its annual economic and fiscal policy plan said Tuesday.
Japanese news agency Kyodo News reported that under the draft blueprint, Japan aims for consistent economic growth of at least 1 percent even after 2030, when the country's population is projected to begin declining sharply.
It views the coming years until fiscal 2030 as a critical period for Japan, already one of the fastest-graying societies, to address labour shortages and boost its growth potential.
The government underscores the need for the heavily-indebted nation to restore its fiscal health, the worst among developed nations amid the prospect of more debt-servicing costs after the Bank of Japan raised interest rates for the first time in 17 years.
Budget surplus
In the draft plan, the government maintained a goal of achieving a primary budget surplus -- a key indicator of fiscal health -- in fiscal 2025, with its attainment now in view. It vowed to reduce its outstanding debt in relation to the size of the economy.
The plan, presented at a meeting of the Council on Economic and Fiscal Policy on Tuesday, is expected to be finalised on 21st June after consultations with the ruling parties. The final version of the document will be used by the government to manage its economic and fiscal policy in the coming years.
The draft covers a range of policy priorities but is short on details as to how they will be achieved. Japan's potential growth rate is estimated to be around zero percent.
Still, the economy, which was shy of 600 trillion yen (US$3.8 trillion) in the January-March quarter, can grow to 1,000 trillion yen in around 2040 in nominal terms, if proper policy measures are taken and stable 2 percent inflation is achieved, it added.