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Japan's Abe to announce US$5t GDP target
[TOKYO] Japan's Prime Minister Shinzo Abe will announce a plan to raise gross domestic product to 600 trillion Japanese yen (US$5 trillion) as he shifts his focus back to economic policy, national broadcaster NHK reported on Thursday.
The government will focus on steps to expand incomes, support childcare and nursing for the elderly, NHK said without citing sources. Mr Abe will reveal the plan at a news conference on Thursday marking his election to a second three-year term, NHK said.
The GDP target could draw criticism for being unrealistic because it implies levels of growth not seen in the last two decades, and economists doubt the government will enact policies bold enough to even come close to the target.
"We can expect some measures to stimulate consumer spending because capital expenditure has not been strong enough," said Daiju Aoki, economist at UBS Securities. "With out more radical reforms, this GDP target is unrealistic. Even at 3 per cent annual growth, this would take seven years."
In fiscal 2014, nominal GDP was 491 trillion yen, so the economy would have to expand by 22 per cent to reach the 600 trillion yen mark. Since fiscal 1994, the earliest date that data is available, Japan's nominal GDP has actually contracted by 1 percent.
Since Mr Abe took office in late 2012, nominal GDP has expanded 5.8 per cent as the central bank pursued quantitative easing, and a stock market rally encouraged some individual investors to increase consumer spending.
After an initial wave of success, investors have grown disappointed with the scale of Mr Abe's structural economic reforms.
Cabinet ministers have recently said that Mr Abe will also target increases in capital expenditure as he tries to breathe new life into his economic agenda.
Mr Abe is also trying to shift focus to the economy after the passage last week of controversial national security bills triggered massive protests and damaged his popularity.
Support for Mr Abe's cabinet dropped six percentage points from last month to 40 per cent, with its disapproval rate climbing seven points to 47 per cent, according to an opinion poll by the Nikkei business daily.
The security bills would allow Japanese troops to fight overseas for the first time since the end of World War II, but many voters say this violates Japan's pacifist constitution.