a pharaonic recovery plan to counter inflation – L’Express

“We see that the vicious circle of deflation, symbolized by low prices and wages and weak growth, is being reversed,” declared the head of government.

Thanks to an extremely accommodating monetary policy of the Bank of Japan (BoJ), often considered to be contrary to those of other industrialized countries, Fumio Kishida wants to be optimistic. The Prime Minister believes that “for the first time in 30 years” Japan is “facing a tremendous opportunity to move to a new economic stage.”

Tax reductions, aid for low-income households, or even reductions in the price of gasoline and energy bills… If the Prime Minister was content to unveil his recovery plan in broad terms, several measures were mentioned by the Japanese press. The public television channel NHK, for example, is counting on a tax reduction amounting to 40,000 yen (251 euros) per person and aid of 70,000 yen (439 euros) for low-income households.

A welcome tax relief at a time when the country is experiencing a sharp acceleration in the rise in consumer prices against a backdrop of the Russian-Ukrainian conflict which has added to a fall in the yen. The Prime Minister insists in particular that “the increase in wages does not follow that of prices”, it is then “necessary to temporarily support the disposable income of the Japanese in order to avoid a return to deflation”.

In addition to introducing measures to support purchasing power, the government also intends to give businesses a helping hand. “The most important pillar of this plan of comprehensive economic measures is to strengthen supply capacity to improve income opportunities for businesses,” insisted Fumio Kishida.

The Japanese executive should give more details on this recovery plan, the contours of which still remain unclear. But which, ultimately, could represent a total of 37,400 billion yen (237.7 billion euros) also including investments from the private sector, according to local media.

However, for economist Hideo Kumano, officiating at the Dai-ichi Life research institute, the period over which “short-term expenditure is planned to mitigate the impact of rising fuel prices” is too insufficient at the moment. view of the latest forecasts from the Bank of Japan (BoJ). A timetable which pushes the economist to declare himself “skeptical” about “the capacity of this plan to support sustainable growth of the Japanese economy”.

Others also point out the risk of worsening the finances of the third largest economy in the world, whose level of public debt, which reaches 260%, is among the highest among the major industrial powers. It is now up to the Prime Minister, whose popularity rating has never been so low since his election in 2021, to demonstrate that this will not be the case.