24 Jun 2014
Japan capable of lifting growth rate above 1% over next 1-2 years thanks to reforms - RBS
FXStreet (Łódź) - The RBS team of analysts suggest that Japanese government's economic and fiscal policy guidelines and new growth strategy, disclosed as drafts by the government and ruling coalition, promise detailed action in addressing three major deregulation areas for labour, farming and medical care.
Key quotes
"We think the content reflects much stronger interest in a reformist path than the growth strategy presented last year, which was widely criticised by the market. The policy guidelines also clarify FY15 as the starting point for the lowering the corporate tax rate."
"We believe the government and ruling coalition are keenly aware of the need to include details in these proposals, in contrast to the past practice of only indicating a direction."
"A closer review shows a pullback of some farming reforms and greater ambiguity about the direction of certain energy policy items."
"Nevertheless, we think the proposals clarify the government's firm commitment to halt the decline in Japan's potential growth rate, which is tied to a shrinking labour force, by stimulating corporate activities and thereby boosting capital outlay as well as implementing labour market reforms targeting people, time and productivity."
"We believe Japan is capable of lifting its potential growth rate to above 1% within the next 1-2 years, mainly by encouraging wider corporate investment activity."
Key quotes
"We think the content reflects much stronger interest in a reformist path than the growth strategy presented last year, which was widely criticised by the market. The policy guidelines also clarify FY15 as the starting point for the lowering the corporate tax rate."
"We believe the government and ruling coalition are keenly aware of the need to include details in these proposals, in contrast to the past practice of only indicating a direction."
"A closer review shows a pullback of some farming reforms and greater ambiguity about the direction of certain energy policy items."
"Nevertheless, we think the proposals clarify the government's firm commitment to halt the decline in Japan's potential growth rate, which is tied to a shrinking labour force, by stimulating corporate activities and thereby boosting capital outlay as well as implementing labour market reforms targeting people, time and productivity."
"We believe Japan is capable of lifting its potential growth rate to above 1% within the next 1-2 years, mainly by encouraging wider corporate investment activity."