Japan’s Economy Minister Says New Stimulus if Q3 Dissapoints

Japanese Economy Minister Akira Amari said on Monday that the government should deploy fresh fiscal stimulus to prop up the economy if third-quarter preliminary gross domestic data due on Nov. 17 turns out weak, public broadcaster NHK reported.

Amari also said the stimulus steps should be taken regardless of Prime Minister Shinzo Abe’s decision by year-end on whether to proceed with a second sales tax increase planned for next year aimed at reining in massive public debt.

The comments came days after a shock move by the Bank of Japan to expand its massive monetary stimulus raised speculation that Abe would go ahead with the next tax hike in October, if it were followed by promises of added fiscal steps to offset a tax pain.

Amari said additional fiscal stimulus should be aimed at stimulating private consumption, particularly low-income groups and families with children, hit hard by April’s tax hike to 8 percent from 5 percent.

The government plans to raise the levy to 10 percent in October next year. But April’s tax hike triggered the deepest economic slump since the 2009 global financial crisis, when the economy contracted an annualised 7.1 percent in the second quarter, and a weak recovery in the following quarter cast doubt about the next tax hike.

Amari, speaking at a seminar, noted some private-sector economic forecasts for July-September are said to be short of an annualised 2 percent, compared with an initial projection of above 4 percent growth, according to NHK.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza