This past Friday, the Prime Minister of Japan, Shinzo Abe, stated
that in the event an economic crisis similar to the 2008 crash happens again,
he is willing to postpone next year's planned consumption tax hike. The
consumption tax rate is set to be raised from 8 percent to 10 percent in April
2017. The article comments that "Speculation is growing, though, that Abe
may put the tax hike on hold and call a snap election for the Lower House. “If the Japanese economy is not doing
well, it’s the failure of Abenomics,” said Adachi of JPMorgan. The
consultations with top foreign experts allow Japanese leaders to say: “Our
policy is working and it’s the fault of the severe global environment.”" Economist
Tomo Kinoshita of Nomura Securities Co. puts the likelihood of a delay at 40
percent. “It’s not the main scenario, but the possibility of a delay is
growing,” he said.
This uneasiness in fiscal policy reform
comes at time when several parties have risen in Japan's political scene with
the specific goal of ousting Abe. They seek to remove his whole party for the
economic downward trend caused by his previous actions, as well as with Abe's
willingness to rewrite the Japanese constitution to allow for a standing armed
force, something not seen since World War II (he has not given his consent, but
has merely stated it is a possibility).
Japan is currently experimenting with a
negative interest rate, in hopes of lowering their deficit that is already
double their maximum GDP. Consumer confidence is also very low, with the
economic situation in Japan only worsening with the implementation of "Abeconomics".
What is the most logical step moving forward for Japan's economy, and is it
even possible to implement with the current political parties involved?
http://www.japantimes.co.jp/news/2016/03/25/business/economy-business/abe-willing-to-postpone-tax-hike-at-eleventh-hour-if-necessary/#.VvhmvJY5rN1
I strongly dislike this hike in taxes as it will hinder investment. Also, it is shocking their their deficit is double their GDP. How does a country get in a hole like this? I believe they need a new party in power in order to get their country out of this deficit.
ReplyDeleteA new party might just complicate things for them. I mean, their economy is in a terrible spot, perhaps using negative interest rates could do something more productive than getting rid of everything and starting over with a new party.
ReplyDeleteA politically sound move on his part. As enemies encroach it's imperative to find a middle ground. An increase in taxes wouldn't necessarily be a huge problem for them however, with a negative interest rate their investment must be through the roof. An increase in tax wouldn't effect investment nearly as much as saving, which in this economy, would be practically nonexistent anyways.
ReplyDeleteIt is definitely worth admiring the Prime Ministers courage as the people are in favor of increasing taxes, but the prime minister will halt this since it is much more beneficial for Japan. Although i don't agree with Robert as negative interest rates usually are not a successful strategy and don't really help Japans cause relating to the current situation they are in.
ReplyDeleteIt is definitely worth admiring the Prime Ministers courage as the people are in favor of increasing taxes, but the prime minister will halt this since it is much more beneficial for Japan. Although i don't agree with Robert as negative interest rates usually are not a successful strategy and don't really help Japans cause relating to the current situation they are in.
ReplyDelete