Japan needs a “resilient” economy to overcome new challenges by looking for ways to curb the coronavirus spread and promote economic activities concurrently, and implementing reform measures to improve the business environment, a government report said Friday.
With the nation still struggling to contain the pandemic and unable to focus on reviving the economy, it is vital to build an economy capable of flexibly responding to emergencies such as supply chain disruption and climate change, according to the white paper on the economy and finances for fiscal 2021.
People wearing face masks walk in Tokyo’s Marunouchi business district on Aug. 2, 2021. (Kyodo)
At a time when the domestic economy remains “on a recovery phase but its pace is moderate,” the annual report said the country needs to address three pressing issues — balancing COVID-19 measures with economic revitalization, strengthening supply chains, and promoting business restructuring and labor market liquidity.
The white paper calls for practical ways including use of a vaccination certificate to revive consumption and help support corporate activities.
The government said last week that more than half of Japan’s population has been fully vaccinated against COVID-19, with the inoculation rate finally catching up with the United States, Britain and other major economies after the slow rollout.
As for supply chain disruptions, new measures are needed to deal with supply shortages of key products such as semiconductors and auto parts whose output has been affected by the pandemic in Southeast Asia.
The report calls Prime Minister Yoshihide Suga’s pledge to achieve carbon neutrality by 2050 and establishment of the Digital Agency a “big first step toward reforms,” which has prompted firms to invest in digitalization and decarbonization.
The country’s real gross domestic product, which shrank last year due to the economic fallout from the virus spread, is expected to rebound to a pre-pandemic level possibly by the end of this year, it said.
The report comes before Wednesday’s vote for the ruling Liberal Democratic Party’s new president, who will succeed Suga.
All four candidates in the LDP race plan to compile a stimulus package to keep supporting the pandemic-hit economy.
Japan, whose fiscal health has long been the worst among major developed countries, has a goal of turning its primary balance — tax revenue minus expenses other than debt-servicing costs — into the black by fiscal 2025. But the report said the “immediate task” is to bring the economy back to a growth path.