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[TOKYO] Japanese Prime Minister Shinzo Abe unveiled a new economic growth target, switching his policy focus to children and the elderly after the passage of unpopular defense bills last week sparked scuffles in parliament and undermined public support.
In remarks following his official reappointment Thursday as leader of the ruling Liberal Democratic Party, Abe scarcely mentioned tricky regulatory reforms that many economists say are already too slow. Instead, he laid out three new "arrows" of his so-called Abenomics policies:
* A strong economy - with a new gross domestic product target of 600 trillion yen (US$5 trillion), up from the current 500 trillion yen. He gave no time-frame
* Increased support for families with children
* Social security Since taking office in December 2012, massive monetary stimulus and fiscal spending have weakened the yen about 30 per cent against the dollar, boosting exporters' profits and stock prices. Economists have called for more deregulation, especially in the labor market, to encourage corporations to invest their record cash reserves.
Mr Abe's change in policy direction comes after his bills to expand the role of Japan's military - criticized by many as a breach of the country's pacifist constitution - triggered huge protests outside parliament. Support for his cabinet fell to 39 per cent in a poll published by the Kyodo news agency on Sept 20, while about half the respondents said they disapproved of his government.
"The result of Mr Abe's security policies has been that public approval has tumbled," said independent political analyst Minoru Morita. "He is probably worried about that and is turning back to the economy as a way to claw back public support."
The government has had a growth target of boosting nominal GDP annually by 3 per cent, on average, over the medium-to-long term. Its target for real growth (which discounts inflation) is 2 per cent, compared with minus 0.1 per cent in 2014 and a projected expansion of 0.7 per cent this year.
Achieving the 600 trillion yen target "would be pretty hard, even if you look at a time frame of 10 years," said Junko Nishioka, chief economist for Japan at Sumitomo Mitsui Banking Corp in Tokyo. She added that it was theoretically possible to reach the nominal goal through monetary easing and inflation, but that Abe should keep his focus on strategies to boost growth.