TOKYO Japanese Prime Minister Fumio Kishida pledged on Monday to take measures to cushion the economic blow from rising inflation and boost inbound tourism to maximise the benefits from a weak yen, in a bid to prop up his sliding approval ratings.
In a policy speech to parliament, Kishida stressed that revitalising the economy was his top priority, because of rising living costs and the fallout from the yen's recent sharp falls. The risk of a rise in electricity bills is a big challenge for Japan in the coming spring. He said that we will take unprecedented measures that will relieve the burden on households and companies.
He said that by the end of the month, the government will compile a package of measures to help alleviate the pain caused by rising inflation.
A year since becoming prime minister, Kishida has seen his popularity plunge due to revelations of his party's ties with a controversial religious party. He is under pressure to reduce the pain from a weak yen, which boosts exporters' profits but hurts households by inflating the cost of importing already expensive raw material prices.
A poll by the Asahi newspaper showed that disapproval for Kishida's administration rose to 50 per cent in October from 47 per cent in September, exceeding the approval rate of 40 per cent.
As part of the measures to boost the benefits from a weak yen, Kishida said Japan will fully open its borders to overseas visitors from October 11 to revitalise inbound tourism.
He said that foreign tourists spend over 5 trillion yen $35 billion annually in Japan will be the focus of the policy measures to maximize the benefits of a weak yen.
Kishida said Japan would take steps to gain from the weak yen by attracting chip and battery plants and promoting exports of agriculture products.
Japan's core consumer inflation hit 2.8 per cent in August, exceeding the central bank's 2 per cent target for a fifth consecutive month, as price pressure increased from raw materials and the weak yen.
The Bank of Japan has shown no intention of tweaking its ultra-low interest rates that are driving down the yen, despite the fact that the Bank of Japan has no intention of supporting a fragile economy.
The government intervened last month in the foreign exchange market to prop up the yen, and hopes to mitigate households' pain from rising prices with subsidies and pay-outs.
Analysts doubt whether Kishida's spending plan will revitalize the economy, or his falling popularity.
Yasuhide Yajima, chief economist at the NLI Research Institute in Tokyo, said Kishida is paying the price for putting off important decisions on economic and energy policy.
His ruling party hasn't done enough to push through structural reforms. That is making it difficult to address the problems that are now being exposed by the COVID-19 pandemic and the weak yen.