Japanese Prime Minister Fumio Kishida pledged Wednesday to prop up the country's stagnant economy, saying wage growth will become a "driver" for economic recovery with prices rising at home following the Ukraine crisis.
Kishida also said at a press conference after visiting the Ise Jingu shrine in Mie Prefecture that his government will implement measures to invite overseas universities to Japan in a bid to promote investment in the Asian nation from abroad.
"For the past 30 years, wages have not grown" although corporate profits have risen, Kishida said, adding that inflation, triggered by global food and energy price hikes in the wake of Russia's invasion of Ukraine in February last year, has been hurting Japan's economy.
Touching on his "new capitalism" economic policy, Kishida said his government will make efforts to achieve a "positive cycle of growth and distribution" of wealth, but he did not elaborate on how the country can realize economic expansion and higher income.
Kishida also promised to help Japanese companies strengthen their international competitiveness by taking steps such as boosting public research and development investment as well as capital spending.
Late last month, government data showed Japan's core consumer prices climbed 3.7 percent in November, a nearly 41-year high, while the economy shrank an annualized real 0.8 percent in the July-September period.
As the world's third-biggest economy has become more sluggish in recent years, Japan's Cabinet has mapped out economic packages designed to mitigate the pain of rising prices without wage growth on households and businesses.
In December, meanwhile, Japan approved a blueprint for allocating 43 trillion yen ($330 billion) to defense budgets over the five years from fiscal 2023, with its regional security environment becoming more unstable due largely to China's military assertiveness.
Kishida said his administration will raise additional funds by cutting other expenditures and increasing taxes, which would dampen household disposable income growth.
Some lawmakers from the ruling Liberal Democratic Party, which he leads, have argued for more national debt issuance to finance greater defense spending, as envisioned tax increases to finance the expansion in the spending has been met with growing public distrust of the government.
Japan's fiscal health is the worst among major industrialized economies, with public debt more than twice the size of gross domestic product.
With the global economy disrupted and its future uncertain amid Russia's war on Ukraine, Kishida also repeated his hopes for a Group of Seven summit he will host in May in Hiroshima.
A lower house member who represents a constituency in the Japanese city destroyed by a U.S. atomic bomb in August 1945, Kishida said he will pitch his vision of a world without nuclear weapons at the gathering.
To pave the way for the summit's success, the premier said he is planning to visit France, Italy, Britain, Canada and the United States from Monday to talk with his counterparts.
The White House announced Tuesday that President Joe Biden and Kishida will meet in Washington on Jan. 13.
The G-7 groups Britain, Canada, France, Germany, Italy, Japan and the United States, plus the European Union.
