Japan’s Prime Minister, Fumio Kishida announced on Wednesday their plans to combat inflation. The government has announced a comprehensive $113 billion economic package, aimed at controlling the effects of surging inflation.
The proposed package encompasses various strategies, including temporary cuts to income and residential taxes, along with subsidies intended to alleviate the burdens of escalating gasoline and utility bills.
Japanese Prime Minister, Fumio Kishida.
More about the plan
Japan is the 4th largest economy in the world. Tons of innovations and supporting their home-grown brands have been the Japanese identity for quite some time now.
Inflation can hit any country in the world. The primary difference remains how bad can it be. Inflation in India is under control and similarly with the big economies.
Announcing the plan, Prime Minister Fumio Kishida told reporters that his government “will protect people’s livelihoods from high prices through effective and drastic easing measures,” emphasizing the need to target energy prices, which he said are “the main cause of the price surge.”
Kishida said his government has decided to take a ‘top-down’ approach to brace against uncertainty and risks in the world economy.
He also suggested it would be possible to use current conditions including the weak home currency to Japan’s advantage, spurring opportunities for growth.
Such added flexibility, makes monetary policy nimbler, reduces undesirable side-effects, and lessens the risks of derailing the economic recovery or undermining price stability.
The rising cost of living is partly blamed for pushing down Kishida’s approval ratings, piling pressure on the prime minister to take steps to ease the pain on households.
With increases in wages proving too slow to offset rising prices, Kishida had said the government will cushion the blow by returning to households some of the expected increase in tax revenues generated by solid economic growth.
Reuters reported on Wednesday the government is considering spending over 17 trillion yen for the package, which will include temporary cuts to income and residential taxes as well as subsidies to curb gasoline and utility bills.
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What is so special about Japan’s economy?
Japan’s economy grew rapidly for several decades after the devastating World War II. However, the country’s economy did enter into a phase in the 1990s where its economy was still. The growth rate fell lower than many other industrialised countries.
The country’s sudden growth was based on unprecedented lines. Rapid expansions in industrialisation and huge business exposures for the home grown companies saw the Japanese follow an aggressive trade policy.
Over the years Japan has managed to diversify the sources. From biggest vehicle manufacturer to the service sectors all have paid their dues to make Japan what it is today.
However, Yamato’s strong domestic market has reduced the country’s dependence on trade in terms of the proportion trade contributes to the GDP when compared with that of many other countries.
World War II
The Japanese economy was near to over due to the aftermath of the WW-II. The rebuilding process was one of the toughest jobs the Japanese had to endure.
However, the outbreak of the Korean War in 1950 changed the perspective for their neighbours. The war led to a huge demand for Japanese products, which led to drive an investment and prepare a base for the upcoming decades.
The one biggest positive that remained constant for Japan was that even after so many challenges the standard of living of people never sky-rocketed rapidly.
By the mid-1980s Japan’s standard of living had increased to the point that it was comparable to that found in other developed countries. In addition, in 1985 Japan agreed with its trading partners to let the yen appreciate against the U.S. dollar, which led to a doubling of the yen’s value within two years.
Nonetheless, Japan continued to have one of the world’s highest per capita gross national products, and it experienced continued annual trade surpluses until the global recession following the financial crisis of 2007-08.
The government’s role
Japan’s economic brilliance was led by strong leadership. Though the extent of direct state participation in economic activities is limited, the government’s control and influence over business is stronger and more pervasive than in most other countries with market economies.
The most important of these agencies is the Economic Planning Agency, which is under the Ministry of Economy, Trade, and Industry (until 2001 the Ministry of International Trade and Industry) and, apart from monitoring the daily running of the economy, also is responsible for long-term planning. These ministries were the protagonists of pulling their country out of the 2007-08 financial crisis.
The government also retains an interest in radio and television broadcasting. It remains active in matters deemed to be of strategic interest, notably nuclear power generation, which is subsidised through a major program to increase generating capacity.
The government always worked for their country, and took steps for the country. Lack or corruption is the reason our asian-neighbours have made it so far.
Late Japanese Prime Minister, Shinzo Abe
Conclusion
In Asia there are only 2 countries who can strengthen up against China, they are India and Japan.
The Asian giant has always proved its worth whether it is the business areas or the service sectors like Software companies. The asian country possesses one of the most brilliant infrastructure systems.
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