Shinzo Abe To Focus on Q3 Data To Decide Next Tax Hike

Prime Minister Shinzo Abe suggested Thursday he will carefully study economic indicators for the July-September period to make a final judgment on whether to raise Japan’s consumption tax rate to 10 percent in October 2015 as scheduled.

Abe’s remark came after data showed that the world’s third-biggest economy plunged an annualized real 7.1 percent during the April-June period. He is expected to decide on the matter soon, possibly in early December.

“The point is whether we can confirm that the economy is returning to a growth path” in the third quarter of 2014 following the 3-percentage-point tax hike to 8 percent from April 1, Abe said in a radio program.

“We should prevent the economy from stalling and falling into negative growth,” Abe also said from the standpoint of promoting his economic policies, dubbed “Abenomics,” which are aimed at beating nearly two decades of deflation.

In the April-June period, the Japanese economy suffered its worst setback since the first quarter of 2009, when its gross domestic product plummeted an annualized 15.0 percent in the wake of the economic downturn triggered by the 2008 global financial crisis.

Some experts project that the country’s economy will only climb 2 percent at the maximum in the three months through September, with the adverse effects of the first round of the two-stage sales tax increase lingering.

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