The Japan economy is in trouble, according to respondents The Wall Street Journal economists. According to them, in the second quarter of Japan’s economy expects a sharp decline.
On average, the surveyed experts expect that the country’s GDP in the last 3 months was reduced in comparison with I quarter by 7.1%. Of course, that economists take tsyfry not the ceiling, and build forecasts of available statistical data. Thus, according to the latest publications, household spending and corporate investment showed a strong decline after April 1 has been raised the sales tax from 5% to 8%.
Experts believe that at the last meeting of the regulator it was just about whether a slowdown in the backlash against the tax increase the time factor or carries a long-term threat to economic recovery. If the GDP data for the II quarter will be worse than expected, the pessimists, there is no doubt, will again blame the government, remembering the experience neduachny increase the sales tax in 1997 Then, we recall, the economy eventually fell into a prolonged recession.
However, there is another point of view. For example, most economists at the Central Bank and the government take a more optimistic assessment. In particular, they argue that the sharp decline in the II quarter will be observed after the sharp growth in the I quarter at an annualized rate of 6.7%, and there is nothing to worry about.
“The higher the mountain, the greater the slope,” – says economist Takeshi Minami Norinchukin Research Institute.
Anyway, the head of the Japanese government’s Shinzo Abe will have to make a difficult decision. According to the presented earlier plan to reduce the national debt, sales tax in the next year may be increased to 10%. However, there is a clause – an increase is possible only if the economy will show a steady recovery. Mr Abe’s decision must announce the end of 2014
“In the near future, the main question is whether consumption will recover in the III quarter or not,” – said a member of the Board of the Bank of Japan Koji Ishida at the July meeting with business leaders.
On Friday, the Bank of Japan made another statement in which he admitted that the export of which has been the main driver of economic recovery remains weak, despite the serious weakening of the yen.
Inflation is also still below target levels. Now the consumer price index increases by 1%, despite the fact that the Central Bank aims to achieve a rise in prices by 2%.
Many Japanese companies complain about the shortage of labor, and the Bank of Japan take it as a positive thing. In toerii this trend will lead to higher wages and, consequently, to an increase in consumption, and ultimately to higher prices.
However, on a national scale while wage growth is not observed. In July, the real income fell by 8%.
If this situation continues, the Bank of Japan will require a further easing of monetary policy and additional incentives. A further increase in the sales tax next year also remains open to question.