Japan’s Sales Tax Delay Could Trigger Snap Election

If Japanese Prime Minister Shinzo Abe were to call a snap election, it could extend the country’s stock rally, but analysts say it would undermine confidence in his ability to put the economy back on a stable path in the longer-run.

Speculation is building that Abe is considering dissolving the lower house of parliament, the more powerful of the two chambers, and announcing a snap election in mid-December if he decides to postpone the 2015 sales tax hike.

“A snap election could have the virtue of giving the government a stronger mandate,” Marcel Thieliant, Japan economist at Capital Economics wrote in a note.

“But it would not be a long-term positive if coupled with a delay in the tax hike… [because it] would probably be seen as a watering down of a key element of Abenomics and could weaken momentum for further reform,” he said.

via CNBC

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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