Bank of Japan Policy Meeting: Part 3:

http://www.boj.or.jp/en/mopo/mpmsche_minu/opinion_2020/opi200121.pdf


Part 3: Comments, analysis and ideas:

Government Representative Opinions:

Ministry of Finance:

1. The government submitted for fiscal 2020 a total amount of 102.7 trillion yen for the revitalization of the Japanese economy. In 2019 the had a supplementary of 4.5 trillion yen.

The Japanese government, as with all governments are always adding supplementary budgets to revitalize the economy, but it seems even more so in Japan, than most governments. This is in no way is a bad idea, but the idea is how much of an effect to supplementary budgets actually work, and even more, how long for the budget to have some kind of affect.

There is always the debate about how much a government should help an economy, as it goes through the normal business cycles of up and downs. Any time, as in 2019 Q4, which was a definite down period, does that indicate the need for a government stimulus or should an economy be allowed to go through its normal cycle, meaning allowed to adjust and change on its own.

Some might say, the circumstances are always a challenge for the Japanese economy since economic growth or GDP growth doesn't get beyond 1.0/1.5% for most quarter or year, the past 30 or so years.

But the positive side, despite ups an downs, the Japanese economy is a stable economy. In all of that 30+ years, compared to other economies around the world, it has never completely fallen apart and or completely bottomed out like during the 1997 Asian Financial crisis or even the 2008 US global financial crisis.

The Japanese economy has remained stable throughout the major global crisis. But of course, this new and upcoming crisis might be different. Meaning the Chinese virus crisis could turn into an actual global economic crisis.

So for now maybe it is good the Japanese government might  be taking some pre-emptive strategies related to future economic challenges that might be coming down the road.

2. The Japanese govt. expects the BOJ to continue to work on achieving the "price stability" target of 2% inflation rate, as the 2% rate might indicate more demand and more consumer spending in the economy.

All economies need as certain level of economic activity or economic momentum, or more importantly a certain amount of money circulating and moving through the economy. Too slow and the economy moves toward deflation and too fast and economy move toward hyper inflation.

Japan has tended to be somewhat on the deflation side but the BOJ, and or other measures and or just normal economic activity has reduced the deflation challenge for now.

Even the BOJ recently has said the 2% target might not be achievable. Except for 2019 Q4 downturn in consumer spending it seemed the economic activity was enough to sustain the economy.

While not what everyone wants, it has remained stable with economic growth of around 1.0% for a while.

To be continued.....


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