INTERVIEW: Abe adviser calls for stronger economic steps for tax hike

June 19, 2019

Tokyo--Koichi Hamada, special adviser to the cabinet of Japanese Prime Minister Shinzo Abe, has emphasized the need for the government to boost economic stimulus measures if it implements a planned consumption tax hike from 8 pct to 10 pct in October.

Speaking in a recent interview, Hamada said that "if (the government) carries out (the tax hike), it is important that it backs future economic growth through government expenditure that exceeds (the increased revenue from) the tax hike."

"I think that the idea that (Japan) should give top priority to achieving fiscal soundness is wrong," he stressed.

Hamada said that while the trade dispute between the United States and China is the "biggest risk" for the Japanese economy, "disheartening effects" caused by the friction "have not appeared" in Japan.

He said that the effects of the U.S.-China trade war on the economy will be nothing like the effects of the 2008 collapse of U.S. investment bank Lehman Brothers.

On Japan falling behind on achieving the Bank of Japan's 2 pct inflation target, Hamada noted that the delay "is not a bad thing for people's daily lives."

He highlighted the need for the BOJ to implement monetary policy measures that are focused on employment rather than prices.

While insisting that it is appropriate for the BOJ to keep its monetary policy unchanged for the time being, Hamada said the central bank will need to strengthen its monetary easing if the employment situation worsens or if the yen becomes stronger.

If the BOJ implements further monetary easing, it should increase the quantity of liquidity supply to the market through asset buying and other methods, instead of cutting interest rates, he said. Jiji Press