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June 19, 2013 1:09 am
Shinzo Abe, Japan’s prime minister, said he had won backing from Group of Eight leaders on Tuesday for Tokyo’s radical three-pronged stimulus policy, which aims to revitalise the Japanese economy and end almost two decades of deflation.
He also played down concerns that the sharp depreciation of the yen prompted by the policy – dubbed Abenomics – could spark currency wars with neighbours as Japan seeks to boost exports.
“This is a policy to achieve domestic objectives and this is not targeted at the foreign exchange rate of Japan,” Mr Abe told reporters in Belfast in Northern Ireland following the G8 summit at Lough Erne.
He said he believed he had gained the “clear understanding” of G8 leaders about the need to pursue his economic policy.
Abenomics is a three-pronged policy of pushing greater fiscal stimulus, looser monetary policy and longer-term structural reforms.
The policy initially resulted in big gains in Japanese equity markets and a weakening of the yen, which prompted concern from some countries that it risked hurting Japanese exports. In the lead-up to the summit, Seoul urged G8 leaders to tackle the “unintended consequences” of Abenomics.
Mr Abe, who was invited by UK Prime Minister David Cameron to lead the G8 discussions on the global economy, said reviving the Japanese economy was good for everyone.
“Through this [Abenomics] initiative I am confident that the Japanese economy would be revived and have this vitality once again. This would [have] a positive impact on the global economy so that would be a win-win situation,” said Mr Abe.
The final G8 summit communiqué praised Japan’s efforts to stimulate its economy but warned it needed a credible fiscal plan to tackle its growing debt burden.
“Japan’s growth will be supported by its near-term fiscal stimulus, bold monetary policy and recently announced strategy for promoting private investment. However, it will need to address the challenge of defining a credible medium-term fiscal plan,” said the communiqué.
Through this [Abenomics] initiative I am confident that the Japanese economy would be revived and have this vitality once again
- Shinzo Abe
Mr Abe said fiscal consolidation could not be achieved unless Japan pulled itself out of its deflation. He said some G8 leaders had raised questions about the impact of looser monetary policy generally. These were not specifically aimed at Japan, he added.
“At the G8 summit meeting the policy that I am implementing has not been raised as a source of concern – I would like to make this clear,” he said.
Mr Abe said he planned to tackle waste in the social welfare system and raise consumption taxes as part of his drive to tackle Japan’s debt. But he said Tokyo would analyse the economy in coming months to determine the success of its policies.
“Of course the economy is like a living creature so whether or not we have this sound fiscal policy or whether or not we have freed ourselves from deflation we would like to make a comprehensive judgment looking at the statistics from April to September,” he said.
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