Japan's Fiscal consolidation plan and reform agenda are positive, concrete targets needed

Reforms are also important to drive further growth in Japan.

The government aims to increase services-sector productivity growth to 2% by 2020, riding the wave of the 2020 Tokyo Olympics. It also targets doubling the number of foreign IT workers to 60,000 by 2020. 

Fiscal consolidation is also part of the latest draft. The government reaffirms its target of a primary balance by FY20 (ends in March 2021). It also targets a primary budgetdeficit of 1% of GDP by FY18, versus a projected deficit of 3.3% of GDP for FY15.

The next three fiscal years are considered a period of intensive fiscal reform, according to the draft. The government plans to cap the total increase in social security spending for the next three fiscal years at JPY 1.5tn, the same as the past three years.