JAPANESE monetary policy is a step in the right direction, but will not bring lasting growth without supply-side reform, IMF boss Christine Lagarde said yesterday.
“The reforms just announced by the Bank of Japan are another welcome step – there is, however, a limit to how effectively monetary policy can continue to shoulder the lion’s share of this effort,” Lagarde said in a speech in China.
But without “comprehensive structural reforms” this would not be enough, the IMF boss said.
One such reform was removing the distortionary disincentives that keep women out of the Japanese workforce, such as marriage tax penalties, she said.
Lagarde pointed to a recent study that found Japanese GDP would be nine per cent higher in 2020 if women’s employment came in line with men’s as evidence of how reform could boost growth.