Japan PM Kishida vows new steps to beat inflation as approval ratings slide


Revitalising economy a top priority - PM Kishida


Govt to compile spending package by end-Oct - Kishida


Steps to target rising utility bills, inbound tourism


Kishida's disapproval rating rises to 50% - Asahi poll

By Leika Kihara

TOKYO, Oct 3 (Reuters) - Japanese Prime Minister Fumio Kishida on Monday vowed to take steps to cushion the economic blow from rising inflation and boost inbound tourism to maximise the benefits from a weak yen, in a fresh attempt to prop up his sliding approval ratings.

Dealing with rising living costs and the fallout from the yen's recent sharp falls will be among steps the administration will focus on, Kishida said in a policy speech to parliament, stressing that revitalising the economy was his "top priority."

"A big challenge Japan will face toward next spring is the risk of a sharp rise in electricity bills. We will take unprecedented, bold measures that directly ease the burden on households and companies," he said.

The government will compile a package of measures by the end of this month to ease the pain from rising inflation, he added.

A year since becoming prime minister, Kishida has seen his popularity plunge due to revelation of his ruling party's ties with a controversial religious party. He is also under pressure to ease 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 on Monday that disapproval for Kishida's administration rose to 50% in October from 47% in September, exceeding the approval rate of 40%.

As part of measures to boost the benefits from a weak yen, Kishida said Japan will fully open borders to overseas visitors from Oct. 11 to revitalise inbound tourism.

"We will powerfully pursue policy measures to maximise the benefits of a weak yen," with a target of having foreign tourists spend over 5 trillion yen ($35 billion) in Japan annually, he said.

Attracting chip and battery plants, and promoting exports of agriculture products would also be among the steps Japan would take to gain from the weak yen, Kishida said.

Japan's core consumer inflation hit 2.8% in August, exceeding the central bank's 2% target for a fifth straight month, as price pressure from raw materials and the weak yen broadened.

Keen to keep supporting a fragile economy, the Bank of Japan has shown no intention of tweaking its ultra-low interest rates that are driving down the yen.

The government intervened in the foreign exchange market last month to prop up the yen, and hopes to mitigate households' pain from rising prices with subsidies and pay-outs.

But analysts doubt whether Kishida's spending plan would help revitalise the economy, or his falling popularity.

"Kishida is paying the price for putting off important decisions on economic and energy policies," said Yasuhide Yajima, chief economist at NLI Research Institute in Tokyo.

"His ruling party has failed to push through structural reforms. That's making it difficult to address problems now being exposed by the COVID-19 pandemic and the weak yen."

($1 = 144.7500 yen)
Reporting by Leika Kihara; Editing by Ana Nicolaci da Costa

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.