Friday, April 22, 2011
[IWS] OECD ECONOMIC SURVEY of JAPAN 2011 [21 April 2011]
IWS Documented News Service
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
Economic Survey of Japan 2011 [21 April 2011]
The 11 March 2011 Great East Japan Earthquake was the strongest ever recorded in Japan and triggered the country’s worst disaster of the post-war era. The OECD will be working closely with the Japanese authorities in the coming months and is ready to assist them in any way we can at this difficult time.
While it is still too early to assess the full extent of the damage, the immediate impact will be to reduce output, although this will later be reversed by reconstruction efforts. Deflationary pressures are likely to remain a headwind to growth. The Bank of Japan should thus maintain an accommodative stance until deflation is overcome, paying attention to downside risks.
The priority for Japan is to address the humanitarian and reconstruction needs, along with the nuclear situation. This inevitably creates the need for short-term increases in public spending. Nonetheless, in light of the debt situation, this may need to be funded by shifting expenditures and by short-term increases in revenues, appealing to the Japanese people’s sense of solidarity.
The fiscal situation has reached a critical point. Chronic budget deficits were projected to push up gross public debt to an unprecedented 200% of GDP, and net debt to 115% in 2011. A credible and detailed medium-term consolidation plan that includes spending cuts and tax increases will thus be a top priority, while taking into account the need for reconstruction spending.
AND MUCH MORE….
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Institute for Workplace Studies
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