The employment situation is steady and individual consumption will be gradually increasing. Japanese companies enjoying good performance will extend capital investment. Housing investment also will recover without doubt when the confusion caused by the aftereffect of the building standards law reform gets settled. The global economy in a good condition will help the Japanese export further expand this summer. These premise ensure that the Japanese economy will attain the 2008 real annual growth rate 2%.It is desired that the nominal annual growth rate should exceed the real one in the process.
The Japanese stock is underestimated lately although Japanese companies are making big profit. It is anticipated that the Nikkei 225 will come back up to the level around twenty thousand yen in 2008.
Global competition, labor costs and stable economic growth are the three keywords to discuss this issue. It goes without saying that raise in pay base over almost all the companies together at the same time no longer exists.
Some companies increasing their productivity and enjoying a good business can reward their employees with pay raise. Others such as medium and small-sized businesses suffering from tough global competition and the current raw material price rise seem to face difficulties.
Innovative technologies are the key to the resolution of global warming problems. When reducing the amount of CO2 coming from business activities, it is more effective to let each industry pursue energy efficiency rather than to force countries to accept binding benchmarks based on a specific year. In addition, it is desirable to collaborate with each other in the world.
Japan, the top-runner in the field of the environmental technologies, must take an initiative to launch the post-Kyoto framework in the coming G8 summit meeting. As a first step, Japan should work hard to build a new international cooperation in development of innovative technologies against global warming.
The ruling and opposition parties must continue policy debate not to stop essential reforms for the Japanese people and national interest. Quite a lot of key issues such as budget bill, the tax reforms and policy plans for the G8 summit wait to be discussed. No time can be wasted. Public finance improvement in continued economic growth is the top priority. The difficult problem does not choose political parties.
The government must have a primary surplus in FY 2011 and further improve the national finance condition. It requires the government to make the maximum spending cut based on the basic policy stance decided in 2006 and 2007.
Stable tax revenue to meet increasing social security expense should also be ensured. The government has decided to increase the portion of the basic pension financed by state tax money up to fifty percent by the end of FY 2009. The target year is just around the corner.
We have to start the national debate on tax system reform immediately. In the process, the national consensus on the consumption tax rate raise should be built.