The government has unveiled a growth strategy aimed at raising nominal GDP to nearly ¥1,100 trillion by FY2040. An analysis indicates that bank lending alone will fall short of the funding required, making it important to expand risk capital from households and institutional investors and reform the country's financial strategy.
The government aims to raise nominal GDP to nearly ¥1,100 trillion by FY2040 and invest more than ¥370 trillion in 52–62 key products and technologies across 17 strategic sectors. Estimates comparing past GDP growth projections with a current-trend projection case have also been presented, indicating that private-sector growth capital will be essential to achieving the target.
It has been pointed out that bank lending alone will be insufficient to achieve the domestic investment target. Assuming annual domestic investment of ¥250 trillion, estimates indicate that a net increase of approximately ¥83 trillion in outstanding loans and an increase in equipment lending would be required. Depending on banks' current profitability and risk appetite, additional funding may be difficult to provide.
Measures to expand the supply of private-sector capital include a review of the financial strategy, with items such as easing risk weights for co-investments with government-affiliated financial institutions under consideration. Measures to encourage individual investment include revitalizing the corporate bond and loan markets, expanding investment in private assets, and expanding GPIF and similar institutional investors.
Short-term visibility into results, avoiding crowding out, and maintaining fiscal soundness are viewed as important conditions for the growth strategy's success. While successful implementation could lift share prices, the significant risk of a short-term correction also warrants attention.