BOJ must take fiscal, monetary measures to prevent another recession
(From The Japan Times August 18 issue)

日銀は二番底回避の対策を

Japan's economy appears to be at a turning point. Real gross domestic product for the April-June quarter grew an annualized 0.4 percent from the previous quarter — much lower than the 4.4 percent for January-March and the 4.1 percent for the October-December quarter. The value of the yen to the dollar remains near the high level that prevailed 15 years ago, hurting prospects for export-oriented firms.

"Eco-car" subsidies and "eco-point" incentives for the purchase of energy-saving products, which helped underpin consumer spending, will end in September and December, respectively. The government and the Bank of Japan must take fiscal and monetary measures to prevent another dip in the Japanese economy.

A Kyodo News survey of 107 major firms — the results of which were released Aug. 16 — shows that 80 percent of them expect the economy to deteriorate in the October-December quarter or in the first quarter of 2011.

Economic activities in the April-June quarter were supported by exports, which increased 5.9 percent from the previous quarter. But prospects for economic recovery in the United States and Europe are weak. Even the Chinese economy is slowing down. Exports to the United States, Europe and emerging economies are likely to become weak.

Consumer spending, which accounts for some 60 percent of GDP, only grew 0.03 percent. The end of eco-car subsidies and eco-point incentives for other products will cause consumer spending to drop, thus compelling makers to cut production. Although capital spending increased by 0.5 percent, the Kyodo News survey hints that enterprises may become reluctant to increase capital spending later on because of pessimistic prospects.

Nominal GDP fell an annualized 3.7 percent, the first drop in three quarters, and the GDP deflator dropped 1.0 percent, compared with a 0.3 percent rise in the previous quarter, indicating that Japan is in serious deflation. The unemployment rate was 5.3 percent in June — worsening for four straight months. The problem is that the government is slow to respond and the BOJ does not appear to have a sense of crisis. They must carry out timely measures that are effective.

日本経済は転換期にあるようだ。4-6月期の実質GDPが年率換算で前期比0.4%増と、4.4%だった前期に比べ大幅に伸びが鈍化した。15年前のような円高ドル安が外需企業には痛手だ。

エコカー補助金は9月、エコポイントは年内が期限だ。政府と日銀は景気が二番底に陥らぬよう財政と金融の対策をとらねばならない。4-6月期の経済活動は輸出に支えられて前期比5.9%増となったが、今後、欧米の経済回復には期待できない。中国ですら減速している。GDPの6割を占める個人消費は 0.03%増にとどまった。エコカー補助金やエコポイントの終了は個人消費を落ち込ませる。企業は悲観的展望で設備投資を嫌がるかもしれない。

日本は深刻なデフレに陥っている。6月の完全失業率は5.3%と4ヵ月連続で悪化した。政府の対応は遅く、日銀は危機感が薄いようだが、ともに時宜を得た効果的な対策を実行すべきだ。