Japan's promise to achieve a growth rate of 7 per cent next year is viewed with considerable skepticism here by economic experts.
Nothing that the Japanese government has proposed so far is likely to propel the economy to so high a performance, they believe.
The 7 per cent growth target was one of the few pieces of good news that Japan has sent to the United States in its current round of trade negotiations and its announcement last week brought some unusually kind words in Washington.
Big growth in Japan is probably highest on the agenda of things the U.S. wants. The theory is that only a highly stimulated economy will increase consumer demand in Japan for imported goods. Therefore it is necessary if the huge trade surplus is to be reduced.
Some American economists regard it as more important even than reducing import barriers in Japan. Even if those barriers were to come down, not much would happen if the Japanese economy isn't able to absorb goods from abroad, they observe. That is why U.S. officials last month pushed Japan hard for a commitment to aim its economy toward a growth rate of 7 to 8 per cent in the fiscal year that begins next Arpil.
Later this week, the government will unveil its new budget and the amount of pump-priming it proposes will be the main factor in determining how much the economy grows.
The government reportedly will propose a budget of $142 billion, an increase of about 29 per cent over the current year. If Prime Minister Takeo Fukuda can be talked into it, it will also include a stimulative tax cut for business and individuals.
Several independent economic research organizations here have cranked those proposals through their computers and have come up with projections far different than the government's 7 per cent growth pledge.
According to the respected Nomura Research Institute in Tokyo, a budget of that size plus a $4 billion tax cut would produce a growth rate of only 4.6 per cent in the next fiscal year.
Two other private economic research organizations reached conclusions similar to Nomura's. Both the Mitsubishi Research Institute and the Research Institute on National Economy are projecting growth rates lower than 5 per cent in the next fiscal year.
Both of them pinpointed the appreciation of the Japanese yen, which hurts the country's exporting companies, as a major reason for the continued slump.
Such an outcome would be most embarrassing for the Fukuda government, which is already being ridiculed abroad for overestimating growth of the gross national product in the current year. Fukuda last spring set a lofty target of 6.7 per cent. Now, after the summer and fall slumps, he is guessing at 6 per cent. Nomura's computers say it will really be only about 5 per cent.
If the private economists are correct, the government's new budget won't make much of a dent in the trade surplus the U.S. and Europe are griping about. The current accounts surplus is liable to be more than $10 billion this year. Nomura Research Institute's Yoshikazu Takao says the new budget and tax cut would mean that next year the surplus would be about $9 billion, not nearly enough of a reduction to pacify governments in the U.S. and Europe.
The government has indicated it hopes to carve the surplus down to $6 billion next year. Takao said it is "almost impossible" to reach surplus that low with the kind of budget Fukuda's government apparently intends to propose this week.
Even some government officials have expressed concern that the 7 per cent growth target will be hard to reach. Last week Moriyuki Motono, director general of the foreign ministry's economic bureau, predicted there would be "a lot of difficulties" in reaching that target.
Big business in Japan has become even more worried than Fukuds's government will not move far enough, fast enough.
Today, four leaders of large business associations urged Fukuda to work hard to achieve the 7 per cent growth rate to satisfy international opinion. If the pledge is not kept, they said, Japan will lose face in world opinion.