Abe: Struggling to make good on his pledges to cut red tape and open up the economy.

AFP/Tokyo

Japan’s Prime Minister Shinzo Abe sought to draw attention back to his attempts to revive the economy yesterday, after the government last week rammed through unpopular laws broadening the role of Japan’s military.
For more than two years the prime minister pushed a huge spending blitz and monetary easing drive – dubbed “Abenomics” – to inject life into the moribund economy and reverse almost two decades of deflation.
“From this very day, Abenomics is entering the second stage,” Abe told reporters, adding the long-term goal was to boost Japan’s economic growth by 20% to ¥600tn ($5tn).
“I would like to raise the clear target of ¥600tn in GDP,” he told a press conference after he was re-elected unopposed as the president of his ruling Liberal Democratic Party until 2018.
Abe said his government would have three arrows under the new Abenomics: a strong economy, support for child rearing, and substantial social welfare.
But some analysts said the new target was not very realistic.
Junko Nishioka, chief economist for Japan at Sumitomo Mitsui Banking Corp, told Bloomberg News achieving the ¥600tn target “would be pretty hard, even if you look at a time frame of 10 years.”
Abe is struggling to make good on his pledges to cut red tape and open up the economy, while inflation remains near zero and growth actually contracted in the second-quarter.
The slowdown of the Japanese economy has rekindled speculation that the central bank might have to unleash yet more stimulus to prop up a faltering recovery.
Last week ratings agency Standard & Poor’s downgraded its sovereign credit rating on Japan by one notch, saying the government had little chance of turning round the economy or weak inflation in the coming years.
Abenomics “will not be able to reverse this deterioration in the next two to three years,” the agency said.
But Abe insisted his economic programme should be credited for bringing Japan “to a state almost no longer in deflation.”
The prime minister also repeated his government will go ahead with raising tax to 10% in April 2017.
“We will carry out the (tax hike) to establish the world’s top social welfare system and to get trust in markets and international community,” he said.
The announcement comes less than a week after his coalition party passed unpopular security bills – in the face of widespread protest – a move that could see Japanese troops engage in combat overseas for the first time since the end of World War II. Opinion polls this week showed Abe’s approval rating had taken a small hit in the wake of the bills.