Shinzo Abe, the Prime Minister of Japan is going to look for a bold policy leader for the post of Bank of Japan Governor. Incidentally, Masaaki Shirakawa, the current Governor of Bank of Japan will complete his term within the next 4 months. Abe also announced that the choice of next Governor will be made after discussing with Koichi Hamada, the Yale Professor and others. Abe added that the new Governor will have to work hard to end deflation and drive this Asian country’s economy from recession.
Only on last week, Abe decided to come up with a spending package worth 10.3 trillion Yen so that the private investment can be stimulated in Japan, thereby helping the economy. The Government and the Central Bank are yet to agree though on implementing the inflation target of 2%, so that the deflation can be ended.
Abe also stated that new Governor should be bold enough to push through a strong monetary policy. Before the next year’s budget is announced, Abe is trying to establish some sort of fiscal discipline. The Gross Domestic Product of Japan has gone down to 3.5% annually in the 3rd quarter of 2012. The same has incidentally contracted throughout the three months which ended on June. This meets the actual definition of recession. Incidentally, a US-Japan summit is expected to be organized in February.
According to a recent report published by Nomura Holdings, the extra spending plan of Abe will help the country to get to an annualized GDP growth of 3.5% in 2013’s 2nd quarter. The GDP forecast for the next fiscal year to be starting from April, 2013, has already been increased to 1.8%, from that of 1%. The report also stated that as the Yen is currently weaker and the US economy is going through a recovery phase, the export prospects for the next few months will be shining.
The spending package will be used to revitalize the medical services, child care and local economies mainly, as announced by the Government officials in last week. It is expected that the Japanese Government will be increasing its spending on the coast guard and defense system in the next fiscal year’s budget. Incidentally, the recent dispute between China and Japan over a particular territory has increased the tensions between the two.