Japan Press Weekly

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2020 August 12 - 18 [ECONOMY]

Koike comments on worst-ever drop of 27.8% in GDP

The Cabinet Office on August 17 released the estimate of GDP for the April-June quarter which marked a 27.8% drop in real terms on an annualize basis, the steepest fall in postwar Japan.

In response to the announcement, Japanese Communist Party Secretariat Head Koike Akira at a press conference in the Diet building pointed out, “This is the third consecutive quarterly decline since the October-December quarter of 2019.This shows that Japan’s economy was severely hit by the COVID-19 pandemic before recovering from the extensive damage caused by the consumption tax increase to 10% in October last year.” Koike added that the failure of the “Abenomics” economic policy, the consumption tax hike in particular, has become even clearer.

Koike referred to the fact that employees’ compensation decreased by 3.7%, the largest fall since the 2008 financial crisis triggered by the collapse of Lehman Brothers and that household consumption has shrunk by more than 30%. He said, “Drastic economic measures to improve people’s livelihoods are necessary.”

Koike pointed out that a reduction of value-added tax rates, which was proposed by the OECD Secretary-General as a relief measure for businesses, has been implemented in many countries, including Germany, the U.K., and South Korea. He stressed, “The consumption tax raise to 10% delivered a heavy blow to small- and medium-sized enterprises and low-income households. Lowering the tax rate to 5% will also be effective to assist these businesses and families.”

Koike also referred to the need for additional measures in the fight against the pandemic, which include a loss-of-income benefit program, the improvement of PCR testing capacity, and financial support for medical institutions, and demanded that an extraordinary session of the Diet be convened without delay.

Past related articles:
> Like other countries, Japan should cut consumption tax to help people during coronavirus crisis [July 27, 2020]
> JCP makes urgent proposal on economic crisis pertaining to coronavirus outbreak [March 13, 2020]