Economic policy

Factbox: Top Economic Policy Positions of Japanese Prime Minister Candidates

September 18 (Reuters) – Japan will find out who will replace Prime Minister Yoshihide Suga on September 29, when the ruling party chooses a new leader, with vaccine minister Taro Kono seen as the frontrunner in the race.

The four candidates for the leadership of the Liberal Democratic Party opened their campaigns on Friday. Below are the main economic policy positions they have taken so far:

TARO KONO

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After serving as minister in charge of deregulation, Kono is calling for targeted spending on growth areas such as renewable energy and the expansion of 5G networks nationwide.

While he declined to comment on the size of a new relief package to cushion the blow of the coronavirus pandemic, Kono called for the need to close the 22 trillion yen ($200 billion) output gap. ) economy.

Kono criticized former Prime Minister Shinzo Abe’s “Abenomics” policies for failing to bring wealth to households and proposed offering tax incentives to companies that raise wages.

Kono also distanced himself from the first arrow of Abenomics – bold monetary easing – calling in 2017 for clearer communication by the Bank of Japan of a super-easy policy exit strategy.

He recently reversed that stance, saying monetary policy must remain accommodative for now given the hit to the economy from the pandemic.

But Kono questioned the feasibility of hanging on to the BOJ’s 2% price target, saying it was “difficult” to achieve. He also said that the central bank must communicate well with the markets on the future course of monetary policy.

FUMIO KISHIDA

The former foreign minister had previously said that if he became leader, fiscal consolidation would be a major policy pillar. He also expressed doubts about the BOJ’s ultra-loose policies, saying in 2018 that the stimulus could not last forever.

With the economy suffering from the pandemic, Kishida reversed course to say the BOJ must maintain its massive stimulus package. He proposed a spending package of more than 30 trillion yen, adding that Japan is unlikely to raise the sales tax rate from the current 10% “for about a decade.”

“Tax reform is the direction we need to move in, although we will not try to fill Japan’s deficit with immediate tax hikes,” he said on Saturday. Read more

He underscored the need to distribute more wealth to households, in contrast to Abenomics’ focus on increasing corporate profits in the hope that profits will eventually trickle down to wage earners.

SANAE TAKAICHI

A former home affairs minister and close associate of Abe, Takaichi said she would stick with a revamped version of Abenomics – making her policy proposal the most reflationary among the candidates.

Takaichi, calling his economic view “Sanaenomics”, said Japan should freeze a balanced budget target until inflation hits the central bank’s 2% target, so that fiscal policies and monetary policy remain expansionary.

“Sanaenomics has three pillars of bold monetary easing, fiscal spending and crisis control investment,” Takaichi said. “We will mobilize them all to achieve the 2% inflation target.”

She said Japan should issue more bonds because it doesn’t have to worry about defaulting on its debt given the central bank’s ability to continue printing money.

“The current ultra-low interest rate environment gives us a great opportunity to take bold (fiscal) action,” she said in a policy speech.

During a political debate on Saturday, Takaichi said this year’s supplementary budget should be targeted and focused on pandemic relief. A larger package reflecting her new policy can be earmarked for next year’s state budget, she said.

SEIKO NODA

Seen as a long shot, Noda offered few clues about his stance on economic policy, including whether Japan needs bolder fiscal and monetary support.

In a policy speech, Noda said Japan should focus on population decline, which “deals a heavy blow to the economy” by shrinking Japan’s pool of consumers and workers.

‘We need a growth strategy that puts children at the centre,’ she said, calling for the issuance of ‘child bonds’ to fund measures to build a society that supports childbearing .

Japan’s growth strategy should also focus on achieving a “green recovery” that helps the country reach its zero-carbon goal, she said.

Japan’s short-term goal must be to offer faster medical support for COVID-19 patients and financial assistance, including general cash payments for all workers, she said.

($1 = 109.8900 yen)

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Reporting by Leika Kihara and Tetsushi Kajimoto; Editing by Michael Perry and Simon Cameron-Moore

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