Japan Press Weekly

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2020 February 11 - 18 [ECONOMY]

Koike: GDP drop caused by consumption tax hike to 10%

Commenting on a 1.6% drop in the GDP in the October-December quarter of 2019, Japanese Communist Party Secretariat Head Koike Akira on February 17 at a press conference said that it is because of last year’s consumption tax increase to 10% and thus it is necessary to lower the tax rate.

The Cabinet Office earlier on the day released the preliminary GDP data in the fourth quarter of 2019 which shows that real GDP shrunk by 1.6% compared to the previous quarter, equivalent to a 6.3% decrease on an annualized basis.

At the press conference in the Diet building, Koike pointed out that the just-released figure was much worse than predictions made by private thinktanks. He said, “If the current situation remains unchanged, this will bring about great hardships to people’s livelihoods and put the economy into a further serious recession.” Koike underscored the need to reduce the consumption tax rate to 5% and implement people-oriented policies in the fields of social welfare, wages, and child rearing.

Koike pointed out that the quarterly GDP growth rate kept decreasing in 2019 (2.6% in the first quarter, 1.9% in the second, 0.5% in the third, and minus 1.6% in the fourth on a quarter-to-quarter basis). He said, “The JCP last year demanded that the Abe government not raise the consumption tax rate during the recession. However, the government ignored the JCP demand and went forward with the tax hike. It was a huge mistake made by the Abe government.”

Koike criticized Prime Minister Abe Shinzo for insisting on the same day at a House of Representatives Budget Committee meeting that the GDP drop occurred due to a warm winter and typhoons. Koike said, “It is clear that the consumption tax hike was the decisive factor for the worsened GDP.”