Bank of Japan Gov. Haruhiko Kuroda showed little concern that the first phase of the sales tax hike could derail an economic rebound as Prime Minister Shinzo Abe decides whether to proceed with it.
"A two-step sales tax increase won't (inflict) major damage to growth in Japan's economy," Kuroda said in a speech Monday in Tokyo, referring to the BOJ's growth forecasts. "We consider a downturn in overseas economies to be the largest risk factor to the outlook for economic activity and prices."
The comments are Kuroda's most direct yet on the potential impact of the boost in the levy, weeks before Abe's administration decides whether to go ahead with the first step — raising the 5 percent levy to 8 percent in April. While Finance Minister Taro Aso has said the government needs to proceed with the increase, Abe's advisers, including Koichi Hamada, have expressed caution.