Abe orders October stimulus to counter planned increase in tax

JAPANESE Prime Minister Shinzo Abe promised new stimulus efforts yesterday, which will be announced in October to coincide with a planned tax hike.

Abe has told cabinet ministers to assemble programmes to ensure growth for the end of this month, reacting to concerns about a hike in the sales tax, which is set to rise from five to eight per cent in April.

After the announcement, the yen drooped to a two month low, back over 100 to the dollar.

Recent data on Japan’s economy has suggested an upswing, with economic growth in the second quarter revised up to 0.9 per cent earlier in the week, but support for the tax rise is still limp. Fifteen years ago, the tax was lifted from three per cent to five per cent, and is commonly blamed for stalling the country’s economy.

The plan is still incomplete, but economy minister Akira Amari told reporters earlier this week that the package was likely to cost around two trillion yen (£12.76bn).