By Stephen Cannon
Tokyo, July 3 (BridgeNews) - The Japanese government will strive to keep the economy growing on an annual basis, inance Minister Masajuro Shiokawa assured business leaders Monday. Despite Prime Minister Junichiro Koizumi's warning that real economic recovery will entail painful structural reforms, Shiokawa's comments indicate the government isn't ready to let the economy contract.
"We shouldn't let the economy contract on an annual basis," a finance ministry official said quoting Shiokawa after the hour and a half meeting with top members of the Japan Association of Corporate Executives (Keizai Doyukai). However, the MOF official said there wasn't any discussion of the need for additional economic measures, such as a widely expected supplementary budget to give the economy an extra fiscal boost this year. However, possibly hinting at the need for further employment measures, Shiokawa told business lobby members that joblessness is "a very important political issue."
One Keizai Doyukai member stressed the importance of carrying out essential structural reforms saying, "It can't be helped if the economy momentarily ceases to grow," the MOF aide said. Another Keizai Doyukai member said, "Japan is at a new launching point for structural reforms. If this makes the economy funny, people will call for further safety nets. But Japan already has a mountain of safety nets. This is the same problem we had before," according to the MOF official. Japan's economy contracted 0.2% in the January-March quarter. While some economists cite dangers that a contracting economy might spark a deflationary spiral, Keizai Doyukai members' determination to see structural reforms carried out shows that they feel that a deflationary spiral isn't as much of a danger as continuing with an inefficiently operating economy.
The MOF aide said that Keizai Doyukai brass also praised the Koizumi Cabinet for putting structural reforms "in an appropriate direction," and made a series of general policy requests including revision of public works spending policies and the creation of a stock option system. Referring to structural reforms, Shiokawa said, "The government shouldn't do things the private sector can handle," the aide said. The meeting was also attended by Vice Finance Minister Toshiro Muto as well as the two parliamentary vice finance ministers and other MOF aides. Keizai Doyukai Chairman Yotaro Kobayashi will meet the press Tuesday at 1330 JT.