LONDON (Reuters) – Prime Minister Fumio Kishida on Thursday said Japan’s economy would continue to see robust growth and told an audience in London that its shift to an upgraded version of capitalism meant investors could back the “powerhouse” with confidence.
“Japan is a buy,” Kishida said.
The Japanese premier told an event at the Guildhall that his new economic policy was an upgraded form of capitalism, in which public and private sectors worked together.
Japan is aiming to generate a virtuous cycle of economic growth and redistribution of wealth under Kishida’s new capitalism agenda, bringing cautious Japanese firms under pressure to raise wages.
Kishida acknowledged the country would face labour challenges and said companies there needed to become more diverse. He said the government would introduce tax incentives to encourage the private sector to boost wages, and that further R&D investment was needed to hit international levels.
Japan has vowed to double the amount of foreign direct investment to 80 trillion yen ($616.76 billion), or 12% of GDP in 2030, from a current 43.5 trillion yen, or 8% of its annual economic output.
Like countries around the world, Japan has been hit by rising energy, food and living costs that have been exacerbated in recent months by a sharp decline in its yen currency and the war in Ukraine.
The yen’s fall to two-decade lows to the dollar would normally be a boon for inbound travellers, but Japan, fearing COVID-19, has kept its borders closed to tourists.
Once a boost to Japan’s trade-reliant economy, yen weakness is benefiting exporters to a lesser extent as many Japanese firms have shifted production overseas.
The government recently upgraded its assessment of the economy for the first time in four months, citing an expected recovery in spending, but warned the outlook was clouded.
The world’s third largest economy is expected to have slowed to a crawl in the first quarter.
Kishida, who became prime minister and won an election last autumn, had been on an extended visit to Southeast Asia before he arrived in London to address the City of London and later meet British Prime Minister Boris Johnson.
($1 = 129.7100 yen)
(Reporting by Tommy Wilkes and Muvija M, writing by William James and Tetsushi Kajimoto in TOKYO; Editing by Catherine Evans)
