Japanese PM Ishiba sets ambitious goals – ¥1 quadrillion GDP, 50pc wage hike by 2040

WEB DESK: Japanese Prime Minister Shigeru Ishiba has set pay raises and a ¥1 quadrillion ($6.9 trillion) economy as the top campaign promises for this summer’s upper house election, as the date nears for voters to give their latest verdict on his administration.

“I’ve instructed senior party officials to make our top election pledge an aim to reach ¥1 quadrillion in nominal GDP by 2040 and increase average pay by 50 percent or more from its current level,” Ishiba told reporters in Tokyo Monday evening.

The pledge comes as Japan is set to deliver a verdict on Ishiba’s premiership as his minority government negotiates lower tariffs with the Trump administration and battles soaring inflation at home, after his party suffered a bruising defeat in general elections last October.

The government will lay out some basic principles for future economic policies by the end of the week, Ishiba said, adding that he wanted to share an understanding with the broader public on what a strong Japanese economy might look like. Last year, the government had already had a goal of reaching ¥1 quadrillion in nominal GDP around 2040, but Ishiba’s pledge gives it fresh attention.

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Ishiba added that it was important for the Japanese people to have a sense of security by achieving wage increases that exceed inflation. To achieve a 50 percent increase by 2040, average pay must increase by about 2.74 percent per year, a little more than the nominal wage increases in recent months. Japan’s nominal GDP in 2024 reached a record ¥609 trillion.

“It’s a very ambitious goal that must be achieved,” Hiroshi Moriyama, the Secretary-General of the ruling Liberal Democratic Party said on Monday to reporters.

The LDP is also eyeing a cash handout of about a few hundred dollars per person ahead of the summer elections to counter rising prices, the Yomiuri newspaper reported on Tuesday. The LDP is still weighing whether to add an income cap to those who can receive the handout, according to the report.

The pace of inflation in Japan accelerated in April, with consumer prices excluding fresh food rising 3.5 percent from a year earlier, compared to a 3.2 percent gain in the previous month, according to data released by the Ministry of Internal Affairs in late May.

Rice prices have been a large factor in pushing up those prices, with the cost of the staple grain jumping 98.4 percent in a year as of April – the highest jump in data going back to 1971.

Ishiba and Agriculture Minister Shinjiro Koizumi have been bent on lowering rice costs, saying that the aim is to halve prices to about ¥2000 per 5 kg.

Under Koizumi’s direction, the agriculture ministry sold stockpiled rice directly to retailers at a fixed price, bypassing the usual supply chain that includes collection agencies and wholesalers.

Those attempts appear to have paid off, with recent polls indicating a bump in Ishiba’s popularity.

Ishiba’s approval ratings increased 6 percentage points to 39 percent, according to a poll by public broadcaster NHK release Monday. A separate poll by broadcaster ANN also showed a 7 percent increase to a 34 percent approval rating.

The NHK poll also showed that about 74 percent of respondents thought favourably of the plan to sell the stockpiled rice at a fixed price instead of an auction.