Japan will aim to create a $628 billion green energy market by 2020 through deregulation and subsidies to promote development of renewable energy and low-emission cars, a draft of the government’s growth strategy showed.
The government will also work with the Bank of Japan to ensure the country exits deflation and achieves stable price growth, according to the draft obtained by Reuters on Tuesday.
“The government hopes the BOJ maintains powerful monetary easing to beat deflation,” the draft said.
“We will also continue to monitor currency market moves carefully and act appropriately as needed,” it said, warning that excessive currency volatility would hurt Japan’s economy.
The draft did not contain any numerical targets for GDP growth or inflation levels by 2020.
The government is crafting a long-term strategy to boost Japan’s growth potential and seek new areas of growth, and hopes to finalise it by the end of this month.
The draft suggests the government will continue to keep pressure on the central bank to support the fragile economy, and stands ready to intervene in the currency market to prevent any sharp rises in the yen from hurting exports.
In the growth strategy, the government said it will seek to develop a 50-trillion-yen renewable energy market and create 1.4 million jobs by 2020. The plan includes measures to promote vehicles that run on alternative energy, so that they make up half of new automobile sales by 2020.
On talks for joining the Trans-Pacific Partnership (TPP) agreement, the draft strategy only repeated the government’s current line that it will “proceed with preconsultations” with member countries for entering the Asia-Pacific regional free trade pact.
The BOJ set an 1 percent inflation target and eased policy in February, and followed up with more monetary stimulus in April to show its determination to beat deflation, but many market watchers believe that day is still far off.
Japan’s economy is expected to outperform most of its G7 peers this year with growth of around 2 percent, helped by reconstruction spending after a devastating earthquake and tsunami last year.
But the stubbornly strong yen, Europe’s continuing debt woes and slowing growth in emerging economies are clouding the outlook for the export-reliant economy. ($1 = 79.6050 Japanese yen)