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(Bloomberg) – Japan’s economy will not return to the pre-pandemic duration without the structural reforms needed to increase productivity and counteract the effect of population decline, according to Bloomberg Economics.
Covid’s crisis prolongs the delay in implementing reforms and means that the economy’s slow recovery from its record contraction is expected to peak in 2028 with genuine gross domestic product still below its 2019 level, according to Bloomberg economist Yuki Masujima.it will then decline 20 percent smaller by 16% by 2019 through 2050.
Top GDP: The road to 2050 is 16% downhill
“These grim projections underscore the importance of finding new tactics to extract more available resources,” Masujima said in a note.”For this reason, one of the biggest dangers to long-term expansion is the inability to push through reforms.”
The report accompanies Japan’s ruling party in a leadership race to succeed outgoing Prime Minister Shinzo Abe after nearly 8 years of his expansion strategy.
Abenomics aimed to boost nominal GDP to six hundred trillion yen ($5.65 trillion) through its so-called 3 arrows: financial relaxation, fiscal stimulus and regulatory reforms.
Yoshihide Suga, abe’s main candidate to succeed Abe, said he would stand and check Abenomics’ progress and signaled his interest in shaking up some industries and bureaucracy.However, the immediate challenge of Abe’s replacement will be to involve the spread of infections while reviving economic activity.
Suga, Japan’s continuity candidate, could also initiate reform
The pandemic is likely to further delayed several critical reforms, from labour market adjustments to fiscal consolidation, Masujima says.
Reducing industry barriers, attracting more foreign direct investment, and expanding labor market flexibility are some of the reforms Japan wants, according to Masujima, who also spoke of a desire to expand intellectual assets and more open to immigration.
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