Japan makes economic pledge
The Daily Yomiuri Asia News Network Tokyo
The meeting of financial ministers and central bank governors from the Group of Seven industrialized nations in Ottawa impressed the world with bright prospects for the world economy.
Consequently, it threw into sharp relief the economic crisis in Japan, which continues to be plagued with recession and deflation.
"Since we last met, prospects have generally strengthened for resumed expansion in our economies," the G-7 finance ministers and central bank chiefs said in a joint statement. At the same time, they did not forget to add a warning--"although risks remain."
Although the statement stopped short of commenting on the specific current economic conditions and problems of individual countries, it is obvious that the United States and other countries regard the Japanese economy as the most threatening factor.
As proof, U.S. Treasury Secretary Paul O'Neill said at a press conference after the meeting that it is Japan's responsibility to carry out policies designed to reinvigorate its economy.
In anticipation that other countries would criticize Japan about its stagnant economy and the government's handling of it, the Japanese government managed to compile economic measures to boost flagging stock prices and stabilize the government bond market just in time for the G-7 meeting.
At the conference, Finance Minister Masajuro Shiokawa spent up to 20 minutes explaining the measures, seeking understanding for Japan's efforts to fight deflation. Reportedly, no criticisms or questions were raised by other participants.
Shiokawa reportedly praised his own performance on that basis, claiming that his counterparts fully approved of Japan's plan. Yet he of all people must be well aware that the situation is not so easy.
The announced stock-price measures, for instance, are only a reworking of what has already been done. Therefore, doubts over their effectiveness have already been expressed among Japanese market players.
The government should take it seriously that the finance minister's statement at the G-7 meeting means Japan has pledged to the international community that it will arrest deflation--a goal already clearly indicated by Prime Minister Junichiro Koizumi.
Now, the government is urged to draw up comprehensive measures covering fiscal policy, the tax system and the financial sector, including the injection of public money into financial institutions, and implement these measures as soon as possible.
Such policies could be agreed upon at the Council on Economic and Fiscal Policy scheduled to be held early this week, or other occasions.
Rumors about a so-called March crisis anticipate that the economy will face a crisis when large numbers of corporations settle their accounts for fiscal 2001. Meanwhile, the Japan-U.S. summit meeting is scheduled to be held in Tokyo on Feb. 18. The government has no time to waste in taking action to overcome the envisaged crisis.
Needless to say, Japan is not the only country that needs to make more efforts for economic recovery. Concerns remain over the prospects of the U.S. economy, which is expected to be a driving force in restoring the world economy.
In the United States, corporate capital investment has been slack and no significant improvement has been seen in employment. The comprehensive economic package plan, on which the administration of U.S. President George W. Bush put top priority to ensure domestic economic recovery, failed to make it through the Senate. Distrust of corporate accounting, ignited by the collapse of major energy trader Enron, has hindered the recovery of stock prices.
In Europe, the German economy has been annoyed by the ailing performance of manufacturers and an aggravated unemployment situation.
The G-7 joint statement promised that each country would "continue to take appropriate measures to foster strong and sustainable economic recovery."
All of the G-7 countries are tasked with the responsibility to make serious efforts for their own economic recovery--and the world's.