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Japan likely to revise proposed budget
January 12, 2019
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TOKYO: Japan’s government said on Friday it will amend the calculation of workers’ compensation in the nation’s gross domestic product and probably revise its draft budget after it understated wages data for more than a decade due to faulty polling methods.

The revisions are not expected to change the pace of economic growth. All the same, it is an embarrassment for Prime Minister Shinzo Abe, because his government has enacted several policies to eliminate the risk of deflation by encouraging wages to rise.

Inaccurate wage data makes it difficult to assess whether Abe’s policies are working and could raise questions about the credibility of other data, leaving policy makers blind-sided in their efforts to foster sustainable economic growth.

“Escaping deflation is Abe’s biggest economic goal, so if you can’t trust the data you can’t make appropriate policy decisions,” said Hiroshi Miyazaki, senior economist at Mitsubishi UFJ Morgan Stanley Securities.

“Only a year ago the government changed the sampling method to try to improve wages data. And now they’re saying they understated the data. Do we really know what’s going on?”

The Cabinet Office, which compiles GDP, said on Friday it will publish revisions for wages from 2016 to 2017 around the end of this month. Next month it plans to publish revisions to data from 2015 and earlier.

Japanese Finance Minister Taro Aso also said on Friday the government is likely to revise its budget draft for the next fiscal year to pay for a shortfall of employment insurance benefits caused by errors in the country’s wage data.

The likely budget revision - a rare move - would follow the revelation that the labour ministry miscalculated workers’ average wages for years.

Reuters

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