Optimism isn’t enoughThe government has announced it will employ stimulus actions, including more fiscal spending to accelerate recovery, in its second-half economic policy outline where it raised the growth target for this year. It aims to achieve 2.7 percent growth this year - compared to the 2.3 percent estimated earlier in the year. That means growth would have to pick up by more than 3 percent in the latter half of the year from the 1-percent pace in the first half.
The slightly brighter government outlook, however, is not persuasive, given an array of risks to the economy on both the foreign and home front. It is our judgment that negative factors overwhelm the positive ones in the second half of the year, but the government remains neutral in its economic policy.
U.S. authorities plan to wind down their five-year aggressive monetary easing campaign even as the economy is yet to show clear signs of recovery. The Chinese economy is also slowing down faster than expected. The recession in the euro zone is protracted and all the stimulus actions are yet to shake the Japanese economy clearly out of its deflationary cycle.
At home, corporate and consumer spending remains depressed. In short, it is hard to find plausible grounds for the government’s forecast that the economy will grow more than 3 percent in the second half.
Why the government remains elusive and out of tune with the harsh economic reality is unclear. Its policy prescriptions and action plans are lacking because of its bad diagnosis and forecast. It promised fiscal stimulus, but stopped short of securing any substantial budget increase and changes in the original spending plan. What it can do is merely expedite supplementary spending.
Other action plans are also a mere listing of earlier campaign promises as well as rhetorical vows to pursue a “creative economy,” achieve a 70 percent employment rate and seek economic democratization. The policy outline has nothing new and no specific plans or goals to accelerate growth.
An economy cannot get better simply based on optimism. We are deeply disappointed by the government’s slack economic outlook and policy measures. We need to hear cool-headed evaluation and plausible actions to devise fundamental strategies for our economy. We remind the government that it is fighting for the real economy, not campaigning for election.