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10 Sep 2013
Flash: Strong Japanese GDP lowers risk of delay in sales tax hike - Nomura
FXstreet.com (Barcelona) - The fact that Japanese Q2 GDP was revised up to +3.8% (saar) vs +2.6% previously, which makes the growth rate close to +4.0%, in view of Yujiro Goto, FX Strategist at Nomura, is positive to implement the tax hike.
Key Quotes
"Growth in private capital expenditure, which was revised to +1.3% from -0.1% previously, is a particularly encouraging sign for the economic outlook. Even though the growth rate was lower than +4.0%, a threshold that Professor Hamada once mentioned to raise the tax rate, today's upward revision has clearly lowered the risk of a delay in the consumption tax hike."
"In relation to the tax hike debate, Economy Minister Amari said today that "Prime Minister Abe is not negative on the tax increase, and his concern is whether there are sufficient measures to support the economy after a tax-rise is implemented", according to Bloomberg.
"Mr. Amari also said the Japanese economy needs stimulus measures if the consumption tax rate is raised, and suggested at least JPY2trn in additional expenditure will be necessary."
"After the strong upward revision to Q2 GDP growth today, the tax debate is likely to focus on how to alleviate the negative impact of the tax hike. The decision is likely to be made on 1 October."
Key Quotes
"Growth in private capital expenditure, which was revised to +1.3% from -0.1% previously, is a particularly encouraging sign for the economic outlook. Even though the growth rate was lower than +4.0%, a threshold that Professor Hamada once mentioned to raise the tax rate, today's upward revision has clearly lowered the risk of a delay in the consumption tax hike."
"In relation to the tax hike debate, Economy Minister Amari said today that "Prime Minister Abe is not negative on the tax increase, and his concern is whether there are sufficient measures to support the economy after a tax-rise is implemented", according to Bloomberg.
"Mr. Amari also said the Japanese economy needs stimulus measures if the consumption tax rate is raised, and suggested at least JPY2trn in additional expenditure will be necessary."
"After the strong upward revision to Q2 GDP growth today, the tax debate is likely to focus on how to alleviate the negative impact of the tax hike. The decision is likely to be made on 1 October."