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INTERVIEW: UBS Wealth Management Economist Foresees Large Negative Tax Hike Impacts

INTERVIEW: UBS Wealth Management Economist Foresees Large Negative Tax Hike Impacts

   Tokyo, Sept. 13 (Jiji Press)--The planned consumption tax hike from 8 pct to 10 pct in Japan on Oct. 1 will likely have large adverse impacts on the country's economy, Daiju Aoki, chief Japan economist at UBS Wealth Management, has said in a recent interview.
   While corporate capital spending on labor-saving equipment has been steady, exports have been weak amid escalating U.S.-China trade friction, Aoki said. A last-minute surge in consumer demand has been seen for items such as home appliances ahead of the tax rate hike, but a slump in spending has also been observed due partly to unfavorable weather, he noted.
   The consumption tax hike "will be a minus in terms of the timing and effects," Aoki said, pointing to decelerating wage growth and sluggish stock prices.
   Also citing the U.S.-China trade war and other uncertain factors abroad, Aoki said, "A hike in the tax rate at a time when people don't have hopes for sustainable economic growth would have big adverse effects."
   On specific impacts from the tax increase, Aoki said that Japan's gross domestic product growth is expected to fall to around 0.5 pct in 2020, with consumers seen tightening their purse strings after the hike. He was quick to add that this forecast is based on the assumption that there will be no sudden deterioration in economic and other conditions abroad.

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