Japan to Aim for End to Deflation in FY 2011

Tokyo, June 18 (Jiji Press)--The Japanese government set a goal of putting an end to deflation in the country in fiscal 2011 as part of its new economic growth strategy adopted at a cabinet meeting Friday.

The government said it will make efforts to achieve a real economic
growth rate of close to 3 pct until the country overcomes deflation.
Reflecting Prime Minister Naoto Kan's proposal for promoting
economic growth via tax hikes, the new growth strategy outlined a policy of
raising taxes to pay for measures to improve social security and welfare
services in a bid to boost demand and employment.
The government asked the Bank of Japan to make utmost efforts to
support the new growth strategy.
After overcoming deflation by making up demand shortfalls totaling
25 trillion yen annually, the government will target stable price rises of
around one pct. To that end, it will work on regulatory reforms with the aim
of improving labor productivity.
According to estimates by the Cabinet Office, implementing existing
policy measures alone would lead to economic growth of only about one pct in
real terms on average over the next 10 years.
By pushing the new growth strategy, the government expects new
demand in the field of the environment to raise Japan's real economic growth
rate by 0.4 percentage point.
New demand in the fields of medical services, nursing care and
childcare is expected to lift the growth rate by 0.3 point.
Combined with contributions by other fields, the government aims to
create fresh demand that can push up the growth rate by a total of 1.0 point
or more under the new growth strategy.