Dean-designate of the Asian Development Bank Institute, Naoyuki Yoshino, talks about the the economic impact of Abenomics. He began by discussing what structural reforms are needed in the Japanese economy for the goals of Abenomics to be fully realised.
Title: Impact of Abenomics on Japan and the Region
Description: Dean-designate of the Asian Development Bank Institute, Naoyuki Yoshino, talks about the the economic impact of Abenomics. He began by discussing what structural reforms are needed in the Japanese economy for the goals of Abenomics to be fully realised.
Asian Development Bank Insitute
Many people in Japan has very long longevity. In 1950, our retirement system was at 55 years old and average longevity was 59 at that time. But now many people retire 60, 65 and they live 85, 90. So we have to utilize the many old people and healthy people to act longer but wage rate should be based on marginal productivity rather than seniority way system. So, making much more people to work that is important.
Secondly, female participation in the labor market is still lower than other countries. And nursery school is very important, child care is very important. So government should provide those services, those who want to work ladies and I think that’s very important for structure change.
Q: What will be the impact of higher sales tax on economic growth?
A: When I looked at the last increase of consumption tax, it was raised from 3% to 5%. Then there was huge decline of housing stats and automobile sales, so these are the goods that will be affected for 6 months or 1 year. But ordinary consumption have never been affected. We have to eat everyday and we go to restaurants and so on. So maybe 6 months or 1 year, there may some negative impact. But in the medium, long term it won’t be, and also collected tax more is very important for Japanese economy in the future.
Q: How do you see Japan’s international trade performance in the medium term and what impact would it have in developing Asia?
A: I think many Asian countries has developed in the past 20 years. One of the reasons is that many Japanese companies created production networks. And Japanese companies shifted their companies from Japan to outside Japan, to Southeast Asia, in China. And that has created jobs and also opportunities for work. But I think those production networks final target for sales, used to go to the US and to Europe and if the Asian countries will be developed and medium income class will be grown then productions they can sell products within Asia. And that will create the Asian growth. So what we needed is those production networks can sell products to Europe, United States but also to Asia and to do so we need economic growth and growth of the middle income class will be very important in Asia.