Economists urge parties to prevent stall in recovery+

TOKYO, Aug. 18 Kyodo - With the campaign for the Aug. 30 House of Representatives election officially getting under way Tuesday, private-sector economists urged political parties not to apply the brakes to the budding recovery of the Japanese economy.

Takahide Kiuchi, chief economist at Nomura Securities Co., said a focal issue
in the election will be which parties can implement policies to put the
Japanese economy on a sustainable growth path following the nation's first
economic expansion in the April-June period in five quarters.
While the ruling Liberal Democratic Party attributes the economic growth to a
series of stimulus measures that it pledges to continue, Hidehiko Fujii, chief
economist at the Japan Research Institute, warned that public works projects
may end up as ''conventional pork-barrel policies'' if the LDP wins the
election.
The Democratic Party of Japan is widely expected to be voted into power at the
coming election.
Proposals by the DPJ to achieve economic recovery by increasing households'
disposable income are estimated to increase the nation's gross domestic product
by 0.2 percentage point in fiscal 2010, said Toshihiro Nagahama, chief
economist at the Dai-ichi Life Research Institute.
But the mere allocation of money to households, such as allowances for
children, would stimulate consumption ''only to a limited extent,'' he added.
Strategies to realize Japan's future economic growth are drawing keen
attention, along with economic measures for the present.
Although the LDP, DPJ and other parties have made policy proposals for Japan's
future growth that are based on contributing to the development of new energy
sources and environmental protection, Fujii brushed them aside as ''lacking
specific plans'' in terms of how manpower, goods and money will be utilized to
create new growth models.
With regard to the nation's fiscal rehabilitation, the LDP stresses the need
for tax system reform including a hike in the consumption tax rate by fiscal
2011, while the DPJ calls for a thorough review of wasteful spending by the
government.
Ryutaro Kono, chief economist at BNP Paribas Securities (Japan) Ltd., said the
DPJ should ''promptly'' unveil specific measures for fiscal rehabilitation.
All in all, the LDP is a ''low-risk, low-return'' party because it is stable
but limited in its reform efforts, while the DPJ is a ''high-risk,
high-return'' party that could realize major reforms, said Mitsumaru Kumagai,
senior economist at the Daiwa Institute of Research.
==Kyodo