His comments came in an exclusive interview with AFP, after the International Monetary Fund welcomed his big-spending and loose-money plans but cautioned there were “considerable downside risks” to Tokyo’s ballooning national debt.
“The Japanese economy has been stagnant and has suffered from deflation over the last 15 years,” the premier said.
“Our GNI (Gross National Income) has diminished some 50 trillion yen ($505 billion). Under these circumstances, Japan was losing its position in the world.
“To counter this, I will push through drastic monetary policy, fiscal measures and a growth strategy that will stimulate private-sector investment, so that the economy can be rid of deflation.”
The Washington-based IMF, which expects Japan’s economy to grow 1.6 percent this year, said the policy prescription dubbed “Abenomics” offers “a unique opportunity to end decades-long deflation and sluggish growth, and reverse the rise of public debt. The rewards are potentially large.”
But in its report issued Friday, the fund warned success was not guaranteed, and public borrowing — already more than twice the size of the economy — had to be reined in and tax revenues had to rise.
“Lack of concrete fiscal measures to bring down public debt, or a delay in the consumption tax increase, could elevate risks of a rise in government bond yields, which would undermine fiscal and financial sector stability,” it said.
The warning came amid convulsions in the Japanese stock market, which has seen precipitous drops in recent weeks that have taken it well off its five-year high — echoing concerns of some investors that Abenomics is all style and no substance.
But on Thursday, Abe hit back.
“Japan has a problem of accumulated debt. Unless we end deflation, in any case, this accumulated debt problem will not be solved,” Abe told AFP.
“I think this is the only way. Now, the Japanese economy is generally recovering smoothly,” he said.
Abe was speaking shortly before French President Francois Hollande touched down in Tokyo for a three-day visit.
Hollande’s trip, the first French state visit to Japan in 17 years, comes after Japan expressed unease over recent sales of French helicopter landing gear to China.
Tokyo says Beijing could use the equipment to reinforce its presence around a contested archipelago where the two sides have been facing off for much of the last year.
Relations between the two Asian powers have soured badly as China has leveraged its rising strength. Japan has embarked on something of a charm offensive, looking for indications of support from friends in the West.
“France is a great naval power,” Abe told AFP. “France and Japan must collaborate not only on the economic level but also at a time where security conditions are changing in the Asia-Pacific region. Our era demands it.”
Hollande is accompanied by six ministers as well as some 40 chief executives, including the head of French nuclear giant Areva.
The two countries are expected to sign agreements in the atomic sector, with the pro-nuclear Abe saying he will order the re-start of more of Japan’s idled nuclear reactors once their safety is assured, despite public unease in the aftermath of the 2011 Fukushima disaster.
Before the catastrophe, Japan used to generate around 30 percent of its electricity from nuclear power. It now only has two reactors up and running, accounting for just a fraction of the nation’s energy mix.
France, by comparison, relies on nuclear power to meet around 75 percent of its energy needs, according to the US-based Nuclear Energy Institute.
Officials will sign a partnership agreement between the French government-funded organisation CEA, which does research in the nuclear field, and the NRA, Japan’s atomic watchdog.