GDP can take its time climb­ing

The Pak Banker - - OPINION - Yomi­uri Shim­bun

IT was 1993 when the term "GDP" be­gan to ap­pear fre­quently in news­pa­pers. Start­ing in that year's Ju­lySeptem­ber quar­ter, the Eco­nomic Plan­ning Agency ( cur­rently the Cab­i­net Of­fice) re­vised its pre­lim­i­nary quar­terly es­ti­mates of na­tional earn­ings, which had mainly been posted in terms of gross na­tional prod­uct, to re­flect gross do­mes­tic prod­uct. The agency deemed it more ap­pro­pri­ate to use GDP to mea­sure do­mes­tic eco­nomic ac­tiv­i­ties, since GNP in­cludes prof­its that Ja­panese com­pa­nies earn over­seas.

Both in the English ab­bre­vi­a­tion and the Ja­panese word, the two terms dif­fer by only one let­ter. Both are yard­sticks for com­par­ing coun­tries' eco­nomic scales. Nev­er­the­less, it seems that GNP some­how has more of an im­pact. It must be be­cause GNP was used to record the achieve­ments of Ja­pan's rapid growth econ­omy. In 1968 the coun­try took a ma­jor step to­ward be­com­ing the se­cond eco­nomic gi­ant of the lib­eral world when its GNP sur­passed that of then West Ger­many.

The phrase "Kutabare GNP" (Go to hell GNP), the ti­tle of a na­tional news­pa­per se­ries, be­came pop­u­lar as the time. It was meant to ad­mon­ish the over­heated econo- my, but it came in­stead to de­fine the price of fame. About 20 years have passed since "D" took over the star­ring role from "N." Dur­ing that pe­riod, a growth rate that hov­ers around zero per­cent has be­come the norm. In 2010, China over­took Ja­pan in terms of GDP, and ever since that fig­ure, an­nounced ev­ery quar­ter, has be­come merely an in­dex that re­flects the pub­lic's ap­pre­hen­sion about the econ­omy.

Prime Min­is­ter Shinzo Abe has tried to cast the in­dex, which many view as a non-en­tity com­pared to its pre­de­ces­sor, in a pos­i­tive light. Abe an­nounced last year the aim of in­creas­ing nom­i­nal GDP to ¥600 tril­lion - an am­bi­tious tar­get con­sid­er­ing the fig­ure was less than ¥500 tril­lion in fis­cal 2014.

Abe be­lieves that

peo­ple's in­comes will in­crease through the ex­pan­sion of cor­po­rate prof­its, and that en­cour­ag­ing cap­i­tal in­vest­ment will lead to the ex­pan­sion of do­mes­tic de­mand.

The vir­tu­ous eco­nomic cir­cle that Abe re­ferred to in his pol­icy speech at the be­gin­ning of the year rep­re­sents a political chal­lenge that the govern­ment must make a top pri­or­ity and tackle by any means pos­si­ble.

How­ever, only six days af­ter Abe's pol­icy speech, Akira Amari, the min­is­ter in charge of eco­nomic re­vi­tal­iza­tion who was ex­pected to play a key role in Abe's eco­nomic pol­icy pack­age, left the Cab­i­net over al­le­ga­tions that he re­ceived il­le­gal political do­na­tions. His suc­ces­sor is known as an ex­pert on the tax sys­tem, but his abil­ity to man­age the econ­omy is un­known. The GDP seems out of luck.

The op­po­si­tion par­ties' en­tire strat­egy in Diet de­lib­er­a­tions seems to be de­bat­ing the at­tributes and abil­i­ties of new and for­mer min­is­ters. This is­sue is im­por­tant in its own right, but should be based on an un­der­ly­ing strat­egy that pri­or­i­tizes a path that will al­low the peo­ple to feel the strength of the econ­omy in their own lives.

"GDP Skytree ni Hage­masare" (The GDP has been en­cour­aged by Tokyo Skytree) - is a sen­ryu poem fea­tured in the cur­rent top­ics sen­ryu sec­tion of The Yomi­uri Shim­bun's Tokyo edi­tion.

It is not nec­es­sary to aim for Skytree's top height of 634 me­ters all at once. It's OK to grow cen­time­ter by cen­time­ter. Such a goal has noth­ing to do with pol­icy dif­fer­ences be­tween the rul­ing and op­po­si­tion par­ties.

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