With Abenomics faltering, Japan is set to outline fresh stimulus including an increased minimum wage

Abenomics is faltering
Picture: Getty Images

Japan’s economy slipped back into recession in the third quarter as the economy contracted 0.2% in the three months to the end of September. That was only marginally worse than the market’s expectation of a fall of 0.1% but coming after the upwardly revised -0.7% growth rate in Q2, it puts Japan back in a technical recession.

Abenomics is clearly faltering. After three years and a debasement in the Yen of more than 50% since Shinzo Abe began his tilt for office from opposition, Japan is now languishing with the annual economic growth rate at -0.8%. That’s remarkable, and disappointing, given a weaker Yen was supposed to spur growth and inflation.

Chatter has been growing for more stimulus from the government in Tokyo to get the economy moving again.

Even though it’s a holiday in Japan today there has been speculation that Abe’s government is about to announce the new round of stimulus focussed on wages, in particular raising the minimum wage by as much as 3%.

Reuters reports that as well as the minimum wage being raised the “government will also offer some financial support to people living off their pensions to bolster consumer spending.”

It’s all part of the plan to boost Japanese GDP to Y600 trillion in the next five years, according to the Reuters report citing a draft of the plan.

Also as part of the package the government will reportedly establish a timeframe for lowering the corporate tax rate below 30% to tackle competitiveness the report showed.

Reports are that the government plans to finalise economic stimulus measures by the end of this month and economics minister Akira Amari is set to present these plans to a meeting of a government advisory panel tomorrow.

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