The 2007 real annual growth rate 2% is attainable. The Nikkei 225 stock average is expected to reach the 20,000 yen level within the year. Emerging completely out of the longtime deflation is what is needed this year. For ensuring these figures, the Japanese government should carry out institutional reform and deregulation without losing momentum.
The goal of getting back primary surplus is just a milepost in the process of public finance rebuilding. Forthcoming increase of public expenditures on the basic pension system in FY 2009 and desperate necessity of the huge national debt reduction gives the government no other choice but to raise consumption tax up to around 2 % by the year of 2011. It goes without saying that maximum spending cut in the administration should come first without fail and national consensus on this issue should be built before the tax introduction.
The CPI has been on the increase, but not solid enough. The Bank of Japan is required to maintain financial policy with great discretion not to bring the country back to the critical status of deflation.
The Japanese public finance rebuilding should be accomplished in its continued economic growth. Keeping this basic stance deep in mind, political parties should clearly show their ideas how to overcome financial difficulties in the long run.
Various tragedies caused by bad human relations have been very much in the national news in recent years. It is feared that sound and elevated mind will be missing in the Japanese society. Education can change the situation. The education system reform, therefore, should also be hotly debated in the upcoming election campaign.