Tokyo / Bloomberg
Japanese Prime Minister Shinzo Abe said that he’s not considering a snap general election this summer to coincide with a scheduled upper house poll, and that he has no intention of delaying a planned increase in the nation’s consumption tax.
Speaking in an interview on Nippon Hoso radio, Abe said he would raise the levy to 10 percent in April 2017 unless there was a big economic shock on the scale of the collapse of Lehman Brothers, or a major earthquake. “At this point, it’s not at a Lehman-shock level, but it is necessary to keep carefully monitoring the economy.”
The world’s third-largest economy contracted in the final three months of 2015, with the misery compounded by data last week that showed exports in January fell the most since 2009. Wage gains have stagnated, consumer prices are barely rising and households are reluctant to spend. This year, the benchmark Topix index has plunged more than 16 percent and the yen has gained against the dollar amid concerns over China’s slowdown and U.S. growth.
Abe has fought and won three straight elections on a vow to revive the economy with his Abenomics plan of loose monetary policy, flexible spending and structural reform. But the current economic woes are complicating his calculus on whether to call a lower house election to take advantage of a divided opposition. He needn’t go to the people until December 2018.
Abe backed the Bank of Japan’s new negative interest rate policy, saying it was not the cause of the current market turmoil. He also said that individuals’ deposit rates wouldn’t turn negative.
The prime minister also said he hoped to visit Russian President Vladimir Putin at an “appropriate time,” saying the pair have “established trust.” The Asahi newspaper reported earlier this month that he’d make the trip around the time of Japan’s Golden Week holiday in late April through early May.