Japan’s new economy minister sees positive signs of ending deflation

Japan’s Minister of Economic Revival Yoshitaka Shinto walks during a cabinet reshuffle at the Prime Minister’s Office on September 13, 2023 in Tokyo, Japan. REUTERS/Issei Kato/File Photo Get license rights

TOKYO, Sept 14 (Reuters) – Japan’s new Economy Minister Yoshitaka Shinto said on Thursday positive signs were emerging in output gaps and other areas of the economy’s escape from deflation.

Shinto, however, said at his opening press conference that those signs needed to gather strength before declaring victory over deflation, the cycle of persistent price declines that hamper economic growth.

„It is important to achieve private demand-led growth and get out of deflation,” Shinto said, echoing the resolve expressed by Prime Minister Fumio Kishida a day earlier.

Shinto declined to comment on monetary policy when asked if the end of inflation was a precondition for the gradual phasing out of monetary stimulus.

Shinto replaced Shigeyuki Koto as Economy Minister in a cabinet reshuffle on Wednesday and will play a key role in compiling the new economic package.

„I want to do it boldly,” he said.

The new package could further reduce the public debt burden, which runs more than twice the size of the economy, the world’s third largest and largest among industrialized nations.

„The primary balance target can be achieved by putting the economy on the path to growth … We need to achieve both growth and fiscal reform,” Shinto said.

Kishida said on Wednesday that he would instruct his cabinet next month to put together a new economic package to ease the pain of fuel and other living costs, and create a supplementary budget to fund it in due course.

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However, Kishida’s aim to balance the primary budget by the end of the fiscal year in March 2026 could become more elusive.

Little is known about Shinto’s views on monetary and fiscal policies during his eight years in an inner-party post.

But he is considered close to the late former prime minister Shinzo Abe, who took power in late 2012, pledging to revive the ailing economy through bold demonetisation, flexible fiscal spending and an „Abenomics” recipe for growth strategy.

Report by Tetsushi Kajimoto; Editing by Jacqueline Wong & Simon Cameron-Moore

Our Standards: Thomson Reuters Trust Principles.

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