Japanese Prime Minister Shinzo Abe. (File Photo)
Japanese Prime Minister Shinzo Abe said propping up domestic demand would be a priority for his government as economic data show signs of weakness ahead of a planned increase in the sales tax in October.
"We are seeing weakness in exports and some production sectors, and we must pay close attention to overseas economies going forward," Abe said after a meeting of the Council on Economic and Fiscal Policy, according to a transcript published late Tuesday on the website of the Prime Minister's office. "It's important to secure a virtuous cycle of growth and distribution by supporting domestic demand."
The Monday release of Japan's coincident index, one of the broadest indicators of current economic activity, pointed to a worsening of conditions for the first time in more than six years, indicating there is a good chance the world's third largest economy is in recession.
Critics of the tax hike say it would push the economy off its recovery path, especially if growth is already looking vulnerable as a result of the overseas slowdown and the escalating U.S.-China trade battle that has sent shock waves through economies worldwide.
"We want to manage the economy in such a way that we can make the increase as planned," Chief Cabinet Secretary Yoshihide Suga told reporters Monday. "There is absolutely no change." He did not rule out additional fiscal stimulus to prepare the economic environment for the tax.
Ruling LDP Koichi Hagiuda -- an Abe ally who set tongues wagging last month by suggesting that bad economic data later this quarter could put the tax plans on ice -- quickly walked back his own position.
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