Japanese Prime Minister Shinzo Abe vowed to increase private investment and infrastructure exports as part of his strategy to overcome deflation and build on an economic expansion fueled by rising consumer spending.
“After long years of deflation, I can’t yet say this is more than a sign of a turnaround,” Abe said in a speech yesterday in Tokyo. “I will do everything in my power to turn this movement into strong growth.”
Abe said he aims to get annual private investment back to 70 trillion yen ($682 billion), the level before the 2008 financial crisis, through deregulation, taxes, spending, and equipment leasing deals. He also outlined a target of tripling infrastructure exports to about 30 trillion yen by 2020. Abe has said he will reveal his full growth plan ahead of the Group of Eight summit in Northern Ireland on June 17-18.
The measures are part of the “third arrow” of the prime minister’s strategy to revive the world’s third-largest economy through structural changes to improve competitiveness. His push for increased Bank of Japan monetary easing combined with fiscal stimulus has persuaded Japanese to open their wallets and sent stocks soaring as the yen weakens.
“We have gained international understanding for Abenomics,” Abe said.
Japan’s economy expanded the most in a year last quarter as consumer spending rose and exports gained on the weakening currency. The government announced 10.3 trillion yen in extra spending in January and the central bank said it would double its purchases of government bonds to defeat deflation.
Abe, who pledged last month to boost the economy by backing medical research and expanding childcare to allow more women to work, has also signaled willingness to lower tariffs by joining talks on a regional trade agreement. Facing opposition from farmers to the Trans Pacific Partnership, he promised to double the income of agricultural communities in 10 years.
The government will set up a public “land bank” to aggregate Japan’s growing swaths of unused agricultural land, making it more profitable to farm, and provide subsidies for rice paddies that help prevent flooding, Abe said. He added that he believes it is possible to double agricultural exports to one trillion yen.
Among other changes, Abe plans to overhaul regulations on cars powered by fuel cells, and allow experimental self-driving automobiles to be tested on public roads, he said.
The plan to increase infrastructure exports will be backed by increasing loans from the Japan Bank for International Cooperation, according to a document provided by the prime minister’s office.
Abe is pushing Japan’s nuclear energy expertise even as he mulls the restarting of atomic plants shut by the 2011 Fukushima disaster. Mitsubishi Heavy Industries Ltd. and Areva SA of France signed a $22 billion agreement this month to build a nuclear power plant in Turkey in a ceremony in Ankara Abe oversaw with counterpart Recep Tayyip Erdogan.
Japan’s benchmark Nikkei 225 Stock Average has risen 54 percent and the yen has fallen 18 percent against the dollar since Abe’s LDP won a landslide victory on Dec. 16.