Abe Pledges Extra Budget to Boost Japanese Economy

Prime Minister Shinzo Abe pledged Tuesday to craft an extra budget for fiscal 2014 to take necessary measures to prop up Japan’s economy, faltering in the wake of the 3-percentage-point consumption tax hike on April 1.

The country’s economy “has yet to return to a recovery track,” Abe said at a press conference, while announcing his decision to put off the next tax increase to 10 percent from the current 8 percent, planned for October 2015, by 18 months.

Implementing the tax hike as scheduled would likely “threaten the exit from deflation,” Abe said. But he also stressed he will “definitely” carry out the additional tax increase in April 2017 after putting the economy on a stable growth path.

The scale of the supplementary budget for fiscal 2014 through March 2015, designed to fund steps to bolster private spending by tackling higher energy prices and invigorating regional economies, is expected to be about 3 trillion yen, government officials said.

“We cannot let go of a chance to beat 15 years of deflation,” Abe said, underlining the need to help pull the economy out of its prolonged deflation.

via Mainichi

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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