Japanese Prime Minister Shinzo Abe vowed on Thursday to raise gross domestic product by nearly a quarter to 600 trillion Japanese yen ($5 trillion), pledging to refocus on the economy after the passage of controversial security bills that eroded his popularity. Abe unveiled the plan at a news conference marking his election to a second three-year term as ruling Liberal Democratic Party leader and hence, premier. Abe stopped short, however, of setting a timeframe for the new GDP target, which could raise doubts about the goal.
Facing the need to rebuild public support with 10 months to go before an upper house election in July 2016, Abe said he would focus on shoring up economic growth and reform the social security system to make it easier to work while raising children and caring for the growing ranks of elderly. "The economy will continue to be our top priority," Abe told the news conference, which was short on specifics. "The goal is to create the largest economy in the post-war era to help make people's livelihood the most affluent. I'll make GDP worth 600 trillion yen as our clear target."
Parliament last week enacted unpopular bills that could let troops fight overseas for the first time since 1945, a milestone in Abe's push to loosen the limits of the pacifist constitution. The legislation triggered large public protests and has eroded Abe's voter ratings, which fell six points to 40 percent in a poll published on Monday by the Nikkei business daily. His disapproval rating rose seven points to 47 percent. "It is obvious that the one thing they want to do is demonstrate that it's the economy first, that the economy is back on the front burner," said Jesper Koll, CEO at WisdomTree Japan KK.
Abe said he would raise the sales tax to 10 percent from the current 8 percent in April 2017 as planned, barring big economic shocks, and put revising Japan's US-drafted pacifist constitution - a potentially divisive issue - on the agenda in next year's upper house election. The GDP target could draw criticism for being unrealistic because it implies levels of growth not seen in the last two decades, while economists doubt the government will enact policies bold enough to even come close to the target. Since Abe took office in late 2012, nominal GDP has expanded 5.8 percent as the central bank pursued quantitative easing. In fiscal 2014, nominal GDP was 491 trillion yen. Since fiscal 1994, the earliest date that data is available, Japan's nominal GDP has actually contracted by 1 percent.