-Michael Cucek, a blogger who writes about Japanese politics
Earlier this week Japanese Prime Minister Shinzo Abe upgraded his "third arrow" of the so-called Abenomics, a set of measures aimed at revitalizing growth in the world's third largest economy. The latest string aims at boosting growth potential. Japan's population is aging, while the workforce is falling by 0.5% a year, hence, all growth should come from productivity gains only. Abe will be looking at increasing levels of worker participation, involving women and pensioners and, perhaps, bringing in more immigrants. Otherwise, Japan's economy will be doomed to an insipid growth rate of only 0.5-1.0%. First two arrows have appeared to be successful, bringing consumer prices back to life and pushing growth to 1.5%, while boost in demand from the pre-tax hike was stronger than initially was thought.
This time it will be more complicated for the government. First of all, Abe will encourage corporate management to treat shareholders better. This can be a useful ambition, keeping in mind companies are hoarding cash worth almost 50% of national output. Secondly, Mr. Abe is going to cut the corporate tax, attracting more investment. Currently the rate stands at 35%. Furthermore, Abe aims at agriculture, by loosening rules on ownership of land. Finally, bringing up women in the workforce can also be useful. All these measures will do some good for the economy, however, it will be difficult to implement all these steps and it will take more time.
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