Japan’s Prime Minister Shinzo Abe reshuffled the cabinet on Wednesday, appointing conservative ally Tomomi Inada as defense minister and retaining the foreign minister, Fumio Kishida.
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The reshuffle has been pitched at underscoring the prime minister’s intentions to shore up the nation’s stagnant economy via the actualization of the latest installment of his “Abenomics” blend of economic policies and comes on the heels of the approval of a 28.1 trillion yen (277.74 billion USA dollar) stimulus package a day earlier.
Analysts said the additional government spending would be 6tn yen, only three quarters of which would be spent in the current fiscal year.
She also has defended Japan’s wartime atrocities, including forcing many Asian women into sexual servitude in military-run brothels, and has led a party committee to re-evaluate the judgment of war tribunals by the Allies. “I trust Governor [Haruhiko] Kuroda’s ability”, he added.
The sources spoke to Reuters on condition of anonymity because the plans are not public, although Aso earlier said his ministry would consider 40-year debt, and dismissed speculation the government would consider issuing 50-year bonds.
The government will also allocate 2.7 trillion yen to rebuild areas hit by massive earthquakes in 2011 and April this year.
“What was exciting over the past month was the potential for monetary policy to act in coordination with the fiscal measures and we were definitely disappointed on that front last week”.
“So another sign following Friday’s BOJ decision, policy makers aren’t beating expectations”.
CURRENCIES: The dollar fell to 101.78 yen from 102.39 the previous day.
Japanese Prime Minister Shinzo Abe today picked a close confidante with staunchly nationalist views as the new defence minister, a move likely to raise concerns in China and South Korea.
The Japanese stimulus – which was first announced last week – is the latest in a series in recent years created to fire up the world’s number three economy.
“Not only was the market well prepared for this but after successive recessions and prolonged bouts of deflation over the past 25 years, it is hard for the market not to greet each fiscal package with scepticism”.
SMBC Nikko Securities expects the package will push up real GDP growth by just 0.4 percentage point in the year ending March 2017 and 0.04 percentage point the next one.
After growing at an annualised pace of 4.5 per cent in the first quarter according to revised figures, Japan’s economy shrank by 1.6 per cent in the second quarter, due to weaker exports to China and the United States and poor consumer spending influenced by bad weather. “In terms of genuine fiscal stimulus measures the devil is in the details”.
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Tokyo is also seeking dialogue with Beijing to establish a Japan-China maritime and air communication mechanism to prevent a conflict arising from an accidental collision at sea.
