Deflation returns to embarrass Shinzo Abe

Abe stopped short, however, of setting a timeframe for the new GDP target, which could raise doubts about the goal. Not least is the question of its constitutionality: In multiple surveys of constitutional specialists, more than 90 percent have said they believe that it violates Japan’s basic law, laid down by the United States in the postwar occupation, which renounces the use of force to resolve worldwide disputes.

Abe outlined his economic policies after he was officially re-elected, unopposed, to another three-year term as president of the ruling Liberal Democratic Party.

He has promised to refocus on the economy after triumphing over opponents to security legislation enabling Japan’s military to participate in combat even when the country is not under direct attack.

Though Abe asserts his economic plan will lead to improved livelihoods for his people, some experts, such as Masamichi Adachi of JPMorgan in Tokyo, seemed skeptical. Abe said he was determined to ensure that 50 years from now the Japanese population, which is 126 million and falling, has stabilised at 100 million.

Abe announced the plan at a press conference Thursday as one of the most important policies for social security reform.

It is also encouraging that the Japanese public appears to agree with the positive contributions of Article 9, opinion polls indicating that a clear majority of the Japanese people oppose the new national security legislation and its implicit endorsement of collective self-defense.

Now the Bank of Japan is under increasing pressure to ease monetary policy further, unleashing more stimulus to counter the downturn.

A primary goal of Abenomics Version 2 is gross domestic product of 600 trillion yen ($5 trillion), which would mean a 20-percent increase over Japan’s GDP for fiscal 2014 of about 490 trillion yen. Deputy Economy Minister Yasutoshi Nishimura offered a different view this week, suggesting that hitting the target may be delayed as China’s economic slowdown affects the price of oil and other natural resources. “The prime minister believed it would have more impact to roll out the number of ‘¥600 trillion, ‘ which, if achieved, would make Japan’s economy the largest it has been since World War II”, a close aide to Abe told The Yomiuri Shimbun. Real GDP growth averaged 1.7 per cent over the past five fiscal years.

Economic revival is a given – it’s the very lowest expectation the public have of the government.