Japan, a nation known for its chronic deflation in the past, has witnessed soaring inflation accelerate at a fast pace recently. This gain has primarily been because of the rising energy, the prices of food, and raw materials in the middle of the Russian-Ukraine crisis, with crucial consumer costs, which is the primary gauge for inflation, topping 3% in September, exceeding the Bank of Japan’s inflation goal of 2%.
The measures related to energy will assist the Government in reducing the rise in consumer costs by around 1.2 percentage points, while the more comprehensive broader economic stimulus package might boost the GDP of Japan by approximately 4.6%, as per estimates issued by the Government recently.
Kavan Choksi Japan- The influence of the rapid depreciation of the Yen
Kavan Choksi Japan of KC Consulting is an eminent business and finance expert well known for his expertise in finance and economics. According to him, the impact of the rapid depreciation of the Yen has been felt increasingly as the Bank of Japan maintains its ultra-flow policy of interest rates while its peers around the globe have already shifted to monetary restrictions.
He adds that the rapid movements in currencies that are highly speculative in nature are not desirable for the nation. The Government needs to keep close tabs on the foreign exchange market developments in the coordination and communication policies with the Bank of Japan.
According to the Prime Minister of Japan, the Government has to make the economy strong, and so steps have been taken in its recent economic stimulus package to make the nation stronger. Efforts have been taken to support the small and mid-size companies focusing on exports, encouraging firms to transfer more costs for boosting tourism in Japan.
Steps to attain more incredible wage growth
In order to get better wage growth that will help households battle the current pressures of inflation, the Government will include support for small to middle-scale companies along with steps for promoting the acquisition of new worker skills.
Annual negotiations on wages next spring will be a critical part to observe, and the PM will see how the nation will enter into a phase of economic growth and robust redistribution. According to Kavan Choksi Japan, wage growth is essential for the Bank of Japan’s efforts to get its inflation targets met and the PM’s push for a new method of capitalism in the nation.
There are other steps that have been included in this economic stimulus package, and one of them is the handing out of 100,000 Japanese Yen to every pregnant woman in the middle of the graying of the nation’s population. The economic stimulus package will also support the domestic output of fertilizers, grain, and feed for livestock after the Russian -Ukraine crisis across the globe has increased concerns about supply.
The economy of the nation increased by 3.5% annually in real terms in the April to June quarter due to the lifting of the coronavirus curbs that were executed on demand. However, economists state that the growth of the nation slowed down in the next quarter in September due to the trend of monetary tightening policies across the globe amidst recession concerns.
