The Japanese economy will still have some difficulty in the first half of the year mainly due to the following reasons; Personal consumption is still lacking in vigor because of the severe employment situation and gloomy outlook of earned income status although stimulus package is expected to produce some positive effect. The economic slump and excess in plants and equipment have discouraged companies from making capital investment. The public investment is decreasing. The deflation seems to continue for a while.
The economy will get better gradually in the second half of the year with a help of the following positive factors; The world economy will get back on a recovery truck. It will be followed by increase of export and production. Policy measures aimed to directly support household such as the introduction of child allowance will take effect.
Before everything, the strategy for economic growth drawn by the government must be executed. More specifically, what is needed is tax system reform, deregulations, innovation and closer economic ties with Asian countries. The government needs to expand the safety-net for the jobless and people in need of social security as well as to focus on quick and long effect policies to create domestic demand on the second supplementary budget and the FY2010 budget.
The government and BOJ must go hand in hand to implement necessary monetary policy measures, seeing to economic situations.
Companies will work hard to create jobs by launching new products and breaking fresh ground, making best effort to maintain employment security.