Uncertainty in Future Japanese Economy

The meeting of finance ministers and central bank governors from twenty developed and emerging economies recognized that world economy suffered from chronic weakness of demand in their joint statement delivered in Cairns, Australia, on Sunday. It was inevitable, however, that those leading countries could not send out any integrated massage, embracing fundamental opposition over international relations inside the framework. Japan could not show any specific idea to achieve its growth and improvement of financial balance.

Nikkei Newspaper stressed a comment of the chairman of meeting, Australian Minister of Finance Joe Hockey, which indicated necessity of fiscal stimulus in the future. Communiqué of the meeting required “strong, sustainable and balanced growth and robust financial sectors to safeguard our economies from these risks and put people into jobs.” The ministers and governors set their goal of lifting their collective gross domestic products by 1.8% by 2018.

As a leading economy with consecutive strength, United States requested fiscal stimulus, not directly pointing Germany that suffered from steep decline of growth after sanctioning Russia on intervening Ukraine sovereignty crisis. U.S. Secretary of Treasury, Jack Lew, asserted that low growth of Europe and Japan was disappointing.

This comment revealed a fundamental difference on Japanese economy between Washington and Tokyo. While Japanese political leaders are reluctant to admit slowdown of growth, explaining it as a temporary fall after introducing higher rate of consumption tax in April, U.S. government is looking at slow progress on long-term debt in Japan, even though Japanese government got new resource of income with the tax hike.

Known as cynical figure, Japanese Minister of Finance, Taro Aso, explained that Japan economy was on a tendency of recovery after introducing higher rate of consumption tax in April. He meanwhile showed his positive effort to balance Japan’s budget by 2020. “I realized high expectation on structural reform of Japan,” Aso boasted in his press conference after the meeting.

However, Japanese economy is highly dependent on how world economy will move in the future. Tokyo has mostly no power to deal with negative elements in Ukraine or Islamic State in Iraq. Cheap yen against U.S. dollar is a growing concern. Achieving deregulation for sustainable growth is unlikely as long as leading Liberal Democratic Party stays in the old interests.