Speaking after a seminar on global economic and financial issues, Stiglitz told reporters that against a backdrop of weaker-than-expected worldwide economic conditions, “A consumption tax increase now is going in the wrong direction.”
The 73-year-old recipient of the 2001 Nobel Memorial Prize in Economic Sciences, went on to say that the current course of the global economy was unforeseen, and, as such, Japan’s economic policy should be adaptable.
“A few years ago, no one would have anticipated that the global economy would be as weak as it is today.
When economic circumstances change, you have to adapt your policy to the new economic circumstance,” Stiglitz told Abe at the seminar, which was also attended by other top officials including Economic and Fiscal Policy Minister Nobuteru Ishihara and Bank of Japan Governor (BOJ) Haruhiko Kuroda.
Stiglitz, speaking at the first in a series of seminars aimed at the government garnering a range of experts’ views about global and domestic economic conditions, added that Japan’s monetary policy was sound but that the impact has and would be limited and urged the government to prioritize fiscal policy.
Abe, for his part, said he was grateful for the input ahead of the Group of Seven summit to be held in Japan in May, as such points would be central tenets of the meeting.
Abe has said that raising the sales tax here to 10 percent from the current 8 percent could be delayed if the hike could lead to falling tax revenues and economic activity. Finance Minister Taro Aso has said that the decision will be made based on the potential impact on the economy.
Wednesday’s seminar comes on the heels of the BOJ on Tuesday downgrading its view of the world’s third-largest economy after it decided to plunge its interest rate into negative territory at the end of January, following an economic contraction in the last quarter as consumption waned and exports remained stifled.
As inflation remains flat despite the bank’s easing measures to hit a lofty 2 percent target, economists here have said the bank may unroll further easing measures possibly this summer, that may see the pace and size of the bank’s current 80 trillion yen (705.6 billion U.S. dollars) annual asset buying program increase.
The central bank said that both production and exports were expected to remain “sluggish” for the time being, with the economy expected to remain on a “moderate expanding trend” with risks to the economic outlook here connected to both emerging and commodity-exporting economies.
Similar seminars are slated to be held on Thursday and next Tuesday and will involve a number of high-profile local and international economics experts. Enditem