Japan Press Weekly

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2015 May 20 - 26 [ECONOMY]

Gov’t data proves sales tax hike caused Japan’s negative growth

Akahata editorial (excerpts)

The Cabinet Office announced on May 20 that Japan’s real GDP growth rate in fiscal 2014 (from April 2014 to March 2015) was -1.0%. This is the first time that Japan’s GDP registered a negative growth since fiscal 2009 when the Japanese economy suffered from the global financial crisis triggered by the bankruptcy of the investment bank, Lehman Brothers.

According to the released data, private consumption expenditure was down 3.1% from the previous year, and the amount of private housing investment decreased by 11.6%. This shows clearly that the consumption tax increase from 5% to 8% implemented in April 2014 depressed personal consumption.

Meanwhile, workers’ wages have not been keeping pace with the price rises caused by the sales tax hike. The real wage index in fiscal 2014 was down 3.0% from a year earlier, the largest fall since the current statistics started in 1991. Living conditions of the general public are getting worse.

Claiming that the government economic policy called “Abenomics” will revive the economy, the Abe administration implemented the sales tax increase in defiance of public concern and opposition. It has become obvious that the economic policy brought about subzero growth and is driving the Japanese economy to the brink of collapse. Bank of Japan Governor Kuroda Haruhiko, a champion of the government economic package, remarked that such a prolonged decline in consumer spending was “beyond expectations”.

Further sales tax increase is unacceptable

Abenomics, which features monetary relaxation and expansion of fiscal spending on large-scale public works projects, has weaken the yen and boosted stock prices. It is only big businesses and a handful of the richest people who benefit from the weaker yen and higher stock prices.

It is outrageous that the Abe administration plans to further increase the consumption tax rate from the current 8% to 10% in April 2017. To revitalize Japan’s economy and reconstruct the national finances, it is essential to employ measures to help raise workers’ wages as well as support small- and medium-sized businesses.

Past related articles:
> Abenomics brings about zero GDP growth [February 17, 2015]
> ‘Abenomics’ induced recession hits smaller companies harder: JCP Shiokawa [February 5, 2015]
> Abenomics has increased poverty and inequality in Japan: Gov’t data [November 19, 2014]