{
  "title": "Japan Stands Up",
  "publication": "IMF Blog, August 1, 2012",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2012/08/01/japan-stands-up",
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  "summary": "Japan showed resilience after the Great East Japan earthquake and tsunami of a year ago; reconstruction contributed to strong first quarter growth of 4¾ percent.",
  "sections": [
    {
      "heading": "Resilience and recent performance",
      "content": "- Japan showed resilience after the Great East Japan earthquake and tsunami of a year ago; reconstruction contributed to strong first quarter growth of 4¾ percent.\n- Challenges remain: large and growing public debt, persistent deflation, euro Area turmoil affecting growth prospects, and energy shortages affecting behavior (e.g., “cool biz” attire)."
    },
    {
      "heading": "Rising debt and fiscal challenges",
      "content": "- Net debt has increased ten-fold since 1990 and—at 130 percent of GDP—is the highest of any advanced economy.\n- Social security spending has risen from 10 to 22 percent of GDP while associated revenues have remained flat.\n- Demographic burden on younger households: a typical household with head aged between 20 and 29 can expect to make net resource transfers to the government of 16 years of their income over a lifetime.\n- Fund staff view putting Japan’s fiscal house in order as the first order of business to restore confidence and fiscal sustainability."
    },
    {
      "heading": "Lessons from Europe and the need for credible adjustment",
      "content": "- Once investor confidence is lost, regaining it is difficult; even with low bond yields and no imminent crisis, a credible medium-term adjustment plan is critical.\n- The recent passage by the lower house of parliament of a doubling of the consumption tax to 10 percent by 2015 is an important step and a strong statement of purpose.\n- Adjustment without growth is unlikely to succeed; Japan’s potential growth has been depressed by a shrinking labor force and weak investment, and adjustment may weigh on near-term growth."
    },
    {
      "heading": "Policies to raise potential growth — “A more dynamic Japan”",
      "content": "- Fiscal adjustment can be designed to encourage growth by enhancing incentives to work and invest. Possible measures include:\n  - Combining a higher consumption tax rate with a rise in the retirement age—in line with increased longevity.\n  - Corporate and payroll tax cuts.\n  - Elimination of distorting tax deductions.\n- Increasing women’s labor force participation:\n  - Japan’s women’s labor force participation is currently among the lowest in advanced economies.\n  - Policy levers include tax reform and deregulation of day and long-term care.\n- Increasing integration with regional markets:\n  - Japan lags in inward and outward FDI but is increasingly integrated into the region (examples: new auto facilities in Indonesia; expanded financial activity throughout Asia).\n  - Participation in the Trans-Pacific Partnership and other free trade agreements would strengthen integration and provide positive spillovers to Asia (as noted in a forthcoming 2012 IMF Spillover Report).\n- Financing growth and reorienting the financial system:\n  - The financial system is sound but could better support growth.\n  - Venture capital and financing for start-ups lag badly, while less dynamic SMEs receive guaranteed loans.\n  - A reorientation of public policy is needed to channel financing toward dynamic firms and start-ups."
    },
    {
      "heading": "Integrated policy strategy and outlook",
      "content": "- Fund staff propose a virtuous circle of positive, integrated policies:\n  - Well-designed fiscal adjustment plans to strengthen confidence.\n  - Structural reforms to raise growth.\n  - Central bank actions to end deflation.\n- Ending deflation would help fill fiscal coffers and support activity, reinforcing fiscal and growth objectives.\n- Japan has historical capacity to reinvent and revitalize itself and can do so again.\n\nSource: Japan Stands Up, Jerry Schiff, August 1, 2012.\n\n---\n\n Content in this bundle\n\n- 立ち上がる日本; ジェラルド・シフ; iMFdirect ブログ 2012年8月1日掲載\n  - 立ち上がる日本; ジェラルド・シフ; iMFdirect ブログ 2012年8月1日掲載 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 立ち上がる日本; ジェラルド・シフ; iMFdirect ブログ 2012年8月1日掲載 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Country Report\n  - Country Report (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Country Report (PDF){rel=\"external\" type=\"application/pdf\"}\n- Country Report\n  - Country Report (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Country Report (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- health check\n- typical household\n- financial system\n\nSource: https://www.imf.org/en/blogs/articles/2012/08/01/japan-stands-up"
    }
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    "Authors: Jerry Schiff",
    "Published: August 1, 2012",
    "Japan showed resilience after the Great East Japan earthquake and tsunami of a year ago; reconstruction contributed to strong first quarter growth of 4¾ percent.",
    "Challenges remain: large and growing public debt, persistent deflation, euro Area turmoil affecting growth prospects, and energy shortages affecting behavior (e.g., “cool biz” attire).",
    "Net debt has increased ten-fold since 1990 and—at 130 percent of GDP—is the highest of any advanced economy.",
    "Social security spending has risen from 10 to 22 percent of GDP while associated revenues have remained flat.",
    "Demographic burden on younger households: a typical household with head aged between 20 and 29 can expect to make net resource transfers to the government of 16 years of their income over a lifetime.",
    "Fund staff view putting Japan’s fiscal house in order as the first order of business to restore confidence and fiscal sustainability.",
    "Once investor confidence is lost, regaining it is difficult; even with low bond yields and no imminent crisis, a credible medium-term adjustment plan is critical.",
    "The recent passage by the lower house of parliament of a doubling of the consumption tax to 10 percent by 2015 is an important step and a strong statement of purpose.",
    "Adjustment without growth is unlikely to succeed; Japan’s potential growth has been depressed by a shrinking labor force and weak investment, and adjustment may weigh on near-term growth.",
    "Fiscal adjustment can be designed to encourage growth by enhancing incentives to work and invest. Possible measures include:",
    "Increasing women’s labor force participation:",
    "Increasing integration with regional markets:",
    "Financing growth and reorienting the financial system:",
    "Fund staff propose a virtuous circle of positive, integrated policies:",
    "Ending deflation would help fill fiscal coffers and support activity, reinforcing fiscal and growth objectives.",
    "Japan has historical capacity to reinvent and revitalize itself and can do so again.",
    "**立ち上がる日本; ジェラルド・シフ; iMFdirect ブログ 2012年8月1日掲載**",
    "**Country Report**",
    "**Country Report**",
    "[health check](http://www.imf.org/external/np/sec/pn/2012/pn1292.htm)",
    "[typical household](http://www.imf.org/external/pubs/cat/longres.aspx?sk=26141.0)",
    "[financial system](http://www.imf.org/external/pubs/ft/survey/so/2012/CAR080112A.htm)"
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