IMF chief urges overhaul of Japan's economic policy

TOKYO • The head of the International Monetary Fund (IMF) yesterday called for an overhaul of Japan's economic policy, as the world's third-largest economy battles stubborn low inflation, sluggish growth and a rapidly ageing population.

Ms Christine Lagarde called for a "fresh look" at "Abenomics", the economic policy of Japanese Prime Minister Shinzo Abe, which combines ultra-loose monetary policy with fiscal stimulus and structural reforms.

"We believe that it will require a revamping of policies. The basic principles in our view are still valid but need to be broadened, sustained and accelerated," said Ms Lagarde.

She warned that the economic challenges facing Japan will "only grow as Japan's population continues to age and shrink", noting that both the size of the economy and the population would contract by a quarter over the next 40 years.

The IMF predicted a growth rate of 1.1 per cent this year and a decline to 0.9 per cent next year in the former Asian powerhouse.

Ms Lagarde said that in the battle to get inflation above the Bank of Japan's target of 2 per cent, prices would continue a "slow upward trend" but remain below this bar in the next few years.

A leading advocate of women's rights and one of the world's most high-profile female figures, Ms Lagarde also said "more could be done" to reduce the gender gap in Japan's labour market.

Mr Abe has made getting more women into the workforce - so-called "Womenomics" - a central plank of his economic policy.

But he came under criticism after a Cabinet reshuffle this week that left just one woman in a senior team of 25.

Ms Lagarde noted that more women had been encouraged to enter the workforce, saying: "I think that encouraging long-term employment for Japanese women would certainly be one of the responses to the challenges of the day."

The IMF's annual report on the Japanese economy suggested, among other measures to get more women into the workforce, "increasing availability of childcare and nursing facilities and reducing the gender wage gap".

Japan ranked bottom among Group of Seven countries in the World Economic Forum's latest Global Gender Gap Report, and came in at 114th worldwide.

It scored particularly poorly on women's participation in the economy and political involvement.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on October 05, 2018, with the headline 'IMF chief urges overhaul of Japan's economic policy'. Print Edition | Subscribe