November 4, 2015 / 11:40 AM / 2 years ago

Japan PM calls for steps to achieve a $5 trillion economy

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Japanese Prime Minister Shinzo Abe (C) talks with Chinese Prime Minister Li Keqiang (not pictured) and South Korean President Park Geun-hye (not pictured) during their trilateral summit meeting at the presidential house in Seoul, South Korea November 1, 2015.Jeon Heon-kyun/Pool

TOKYO (Reuters) - Japanese Prime Minister Shinzo Abe instructed the government on Wednesday to come up with an action plan by the end of the month to help achieve his goal of expanding the economy by a fifth to 600 trillion yen ($4.95 trillion) over five years.

Abe hopes that the measures should encourage Japanese firms to spend their record cash piles to boost investment on plants and equipment and raise wages in a bid to generate a cycle of growth led by the private sector.

"In order to achieve the biggest GDP in the postwar era, the business circles need to tackle capital spending and wage hikes. The government will quickly consider steps to support it," Abe told a meeting of his top economic advisory panel.

"I want (Economics) Minister (Akira) Amari to compile urgent measures needed to realize GDP worth 600 trillion yen."

The four private-sector members of the 11-member Council on Economic and Fiscal Policy reckon that Japan needs a potential growth rate of around 2 percent to meet Abe's GDP target.

Currently, Japan's potential growth rate is around zero due to decades of economic stagnation and a declining population, making achieving 2 percent a tough task.

Some economists say Abe's GDP target is unrealistic given that nominal GDP was only 491 trillion yen at the end of last fiscal year.

Reporting by Tetsushi Kajimoto and Stanley White; Editing by Nick Macfie

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