Name: Sanae Takaichi charts a new economic course for Japan | DW News
Uploaded: 2026-02-14T17:10:50.000Z
Duration: 12 min 9 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

She already gained quite a lot of support from the voters.

You know, they gave her a mandate to govern.

Now the dialogue with the market has to begin.

Probably the best thing that the bank of Japan can do is look at whether that that weekend is indeed inviting unwanted imported inflation.

The government might have to get out of its own way a little bit.

I'm not saying that fiscal stimulus should never be used, but, but

the type of fiscal stimulus should be considered.

Japan's Sanae Takeichi has just won the strongest majority for a Japanese government in more than 70 years.

Now she has to deal with an economy hindered by weak private consumption, an aging population and inflationary pressures.

The cost of rice, for example, doubled last year in Japan.

Naomi Fink is chief global strategist at Imova Asset Management.

Now, looking broadly, what problem do you think Takaichi is trying to solve most?

Is it slow growth, weak wages, or national security?

And can she realistically fix all three of these at once?

Well, first of all, I think that the economy is doing a lot better than it was during her mentor's time, Prime Minister Abe.

And paradoxically, that makes it perhaps a little bit more difficult to determine policy.

In Abe's situation, it was pretty much appropriate to engage in fiscal easing and monetary easing in size simultaneously.

However, we have a very different economy.

Now you mentioned inflation and that makes a big difference.

So if you were to engage in some sort of unfettered fiscal stimulus, then you also risk putting upside pressure on inflation.

And that is what ails households right now because we are seeing an expansion in growth.

One of the reasons why households consumption is hindered is because of the rise in prices, especially in food.

So usually inflation is the central bank's job.

So fighting inflation is the bank of Japan's job.

And while the government might be able to put in near term pressures to try to keep growth going, usually what its job really is is to manage the long term fiscal situation.

And while nothing is going to fall apart tomorrow, it's more of a credibility and trust situation.

So the markets now have had a bit of time to process this landslide victory.

How do you think they will judge Takaishi now?

Well, for one, we still have budgets forthcoming and a lot of investors are wondering how those budgets.

Well, what, what the content of those budgets will be and how those budgets are going to be financed.

Are they going to be debt financed and how much?

And if there is a fe feeling by the markets that debt financing is going over the top, then we might see that play out in bond markets.

So I think it's fully possible for Prime Minister Takaichi to establish a healthy dialogue with markets and gain their trust.

And also read the signals coming in when there are the initial thoughts about the budgets floated, whether they are going a little bit over the top when it comes to fiscal stock sustainability and it's possible to adjust this way.

The whole issue of debt has been something that, that people have been talking about.

I mean how she made all these promises which were quite broad during the, during the election campaign and Japan already has very high public debt.

What do you think her threshold would be for too much borrowing, if there is any.

Look, Japan already did set some targets a while ago for fiscal responsibility and it didn't have to do with any type of absolute debt to GDP ratio target.

But they did say that they wanted to target primary balance and Japan is actually looking like it will achieve that this year.

But then on the other hand, prior to the election we heard about the, the abandonment of the year to year primary balance targeting.

So if not that, then there probably has to be another metric signaling responsibility put in place.

And I think at the moment markets aren't really sure what that metric is yet.

And looking, looking at our policies, I mean some of the issues that, that Japan's faces like Japan has struggled to raise wages for a long time.

What specific policies in our plans do you think would actually help to push wages higher?

So I think the main issue here is real wages because nominal wages have been rising for quite some time.

So bringing inflation under control is very important, but again that's the bank of Japan's job.

So there the government might have to get out of its own way a little bit.

And I mean that in the best possible way.

I'm not saying that fiscal stimulus should never be used, but

For example, I think there's been some talk of raising the primary tax threshold.

And if inflation continues, it will also go away.

That's a pretty solid temporary measure that's not going to create any problems for fiscal credibility.

Now I think there's been a greater debate about consumption tax and I think for the moment it's been in the context of do we temporarily exempt food from the consumption tax?

And I'm not saying that that's necessarily a bad idea.

It's just that consumption tax rises in general are hard won measures.

If you do allow a period of exemption, then how likely are you going to be or how credible are you going to be when you say you're going to reimpose it after two years?

Because you know, there are a lot, there's a lot that can happen in that two years.

What's going to enforce that, that reimposition?

And another big factor in the, in the debate has been coming up is, has been the currency.

And are you anticipating, I mean there's an argument between whether Japan needs a weaker or stronger yen.

And you know, Takaichi argued in favor of a weaker yen, but

Are you anticipating a weaker or a stronger yen?

And do you think a weaker yen would be good for Japan right now?

So one thing we have to keep in mind, especially since recently we've heard a lot of comparisons in the media with, with the Plaza Accords, is that Japan's currency is freely floating now.

I mean the bank of Japan also might consider it in interest rate setting, especially if the weekend invites in inflation, imported inflation, but

really the markets decide the level of the yen.

So right now probably the best thing that the bank of Japan can do is look at whether that weekend is indeed inviting unwanted imported inflation.

And as for the government, typically intervention only really happens when moves get disorderly.

And in the absence of those disorderly moves, perhaps it might be a good idea to wait for the bank of Japan to implement monetary policy.

And monetary policy is by nature slow and blunt, but it is the right tool to fight inflation.

And if we do get some greater compression of interest rate differentials over time, then some of the pressure for the yen to weaken may alleviate.

Maybe looking at a more, more macro issue that's facing, facing Japan would be the fact that the population is getting older fast.

Does Takechi have a real plan to tackle these demographic challenges?

Well, so this issue has been known for decades now.

I think Japan's population started declining in 2010.