Institutional Investor (April 7)
In 2013, asset managers “poured a record of $43.7 billion into Japanese equities….and the massive net inflows helped propel the Nikkei 225 index up nearly 57 percent—it’s largest gain in more than 40 years.” As concerns mount about the sustainability of Abenomics, however, “many of those investors have been reversing course.” Nevertheless, some top analysts, such as Mizuho’s Yohei Osade and Nomura’s Jun Konoumi, believe the concerns are overblown and that any consumption tax related slow down will be temporary.
Tags: Abenomics, Analysts, Asset managers, Consumption tax, Equities, Inflows, Investors, Japan, Jun Konoumi, Mizuho, Nikkei, Nomura, Yohei Osade
Financial Times (March 27)
Abenomics “has been judged a qualified success but there are concerns the effort will peter out.” The upcoming consumption tax increase ranks high among these and an even more fundamental concern, that higher inflation would make the government’s debt burden unsustainable, remains untested. If the latter holds true, however, “it is precisely when Abenomics reaches its stated aim that it will begin to unravel.”
Tags: Abenomics, Concerns, Consumption tax, Government, Inflation, Success, Unsustainable
Financial Times (December 31, 2014)
“Japan is no longer a backwater for investors…. The authorities are saying the right things and doing most of them.” Japan outperformed in 2013 and despite concerns over the consumption tax increase in 2014, Japan’s prospects remain robust. “With a wide range of one-off stimulus measures in force to counter a shock that may not come, we think growth could surprise significantly to the upside.”
New York Times (November 14, 2013)
“After a surprising spurt of strong growth in the first half of the year, the Japanese economy seems to be running out of steam as exports and consumer spending show signs of weakening.” The annualized growth rate was dramatically halved, from 3.8% in the second quarter to 1.9% in the third quarter. However, the consensus suggest the rate will increase in coming quarters ahead of the consumption tax hike in April 2014.
Tags: Consumer spending, Consumption tax, Economy, Exports, Growth, Japan, Weakening
The Economist (October 5)
“The prime minister is right to raise the consumption tax, but must do more to boost Japan’s growth.” It is time for the third arrow. These major reforms should “include radical proposals to consolidate farmland, increase competition in the provision of health care and ease the rules on hiring and firing.”
Tags: Competition, Consumption tax, Farmland, Firing, Health care, Hiring, Japan, Prime minister, Reforms, Rules, Third arrow
Wall Street Journal (October 2)
The rise in Japan’s consumption tax is an unwelcome return to the old “tax and spend” playbook. Of the estimated $88 billion in revenue, over $50 billion is marked for spending as stimulus. “More rapid and durable economic growth is the only escape from Japan’s self-constructed fiscal trap. Mr. Abe still has a chance to rescue his economic program with a new reform plan, the long-awaited ‘third arrow.’ But with his tax increase he is creating another headwind to overcome.”
Tags: Abe, Consumption tax, Economic growth, Fiscal trap, Headwind, Japan, Reform, Revenue, Stimulus, Tax and spend, Tax increase, Third arrow
Financial Times (July 2)
Prime Minister Noda took a step in the right direction by increasing the consumption tax. “It was right of Mr Noda to push for the reform, which lifts the 5 per cent consumption tax to 8 per cent, then 10 per cent by 2015.” By achieving the increase, he has defied “impressions that Japan’s politicians cannot get anything done.” The increase will help to narrow the revenue gap. It will also begin to redistribute wealth from older generations to younger generations.