Abe’s Third Arrow Could Clash with His Second One

Prime Minister Shinzo Abe’s Cabinet endorsed Tuesday its revamped economic growth strategy and longer-term policy blueprint, including proposals it believes will help the corporate sector and Japanese share prices.

In the strategy, the government pledged to promote deregulation in the farm, employment and medical areas, all of which have been criticized as preventing Japan from beating deflation for nearly two decades.

Skepticism, however, is growing about whether many of the proposals can be implemented and protests have come from the agriculture and health-care sectors that have long been protected by so-called rock-hard regulations.

The government also promised to cut Japan’s 35 percent corporate tax rate to below 30 percent within a few years from fiscal 2015, as requested by business leaders, arguing the tax rate has curtailed foreign direct investment in the country.

But the tax proposal has some fearing Japan’s fiscal health, worst among developed economies, may deteriorate as the government has yet to decide how to cover a possible decline in tax revenues following a corporate tax cut.

The growth strategy, in which the government expresses eagerness to bolster the “earning power” of Japanese companies, was approved by Abe’s Liberal Democratic Party earlier Tuesday.

via Mainichi

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.