Japan's Abe may focus on regulatory reforms

Japan's Prime Minister Shinzo Abe may focus on regulatory reforms in labor market, updating the social security system in his next term,economists predicts. Market analysts are now busy analyzing the future priorities of Abe, who's just become Prime Minister for a second term. Labor market reforms are crucial for Abe's government for the long-term growth of the world's third largest economy. 

Latest Reuter's survey comprising a group of economists opines that Abe's next term will focus more on monetary easing than going for extra budget support. 

The gross domestic product (GDP) was shrunk to 0.30 percent for the second quarter of 2015. The average GDP growth rate of Japan stands at 0.49 percent during the period of 1980-2015. Japan recorded its all-time high in GDP growth rate at 3.20 percent in the second quarter of 1990 and all-time low of negative four percent in the first quarter of 2009. The 0.30 percent growth rate of GDP for the second quarter this year stands below the average growth rate. 

The GDP growth rate is less than the forecast and has put policy markets under pressure. It needs greater slowdown in the world's third largest economy and needs more regulatory reforms, say economists. Since the unforeseen drop in the manufacturing industry will further erode the advantage of any rebound that may take place in the July-September (third quarter). The annualized GDP growth rate after the second quarter numbers was further dropped to 1.2 percent as against the previous forecasts of 1.6 percent. 

The capital expenditure eased 0.9 percent during the second quarter. This will further offset the gains in inventories. Japanese industry made profits through lower value of currency Yen and low energy costs. This is likely to increase investment and wages as well, predict economists. 

Bank of Japan (BoJ) assures that GDP would grow 0.3 percent in the next third and fourth quarters. The slowdown in GDP growth during the second quarter was temporary. However, July numbers on exports and factory output are not supporting the kind of growth rate, as BoJ expecting for Q3 and Q4. 

Shinzo Abe assumed Prime Minister's office in 2012 and became known for his 'Abenomics' during his regime so far. His focus areas were government spending and easy money. Abe's been trying push forward a legislation that would allow Japanese troops to fight outside the country border.

If the legislation gets through, then Japanese troops can cross the border to fight for the first time since World War-II. His efforts for this made it an unpopular legislation and it's expected to get approach this month most probably.