WASHINGTON – The head of the World Bank expects Japanese consumer spending to start recovering from the drop caused by the first stage of the consumption tax hike sometime around September, and voiced support for an investment bank for Asia as proposed by China.
“What we’re hearing is that many business leaders expect the effects of the post-tax hike drop in consumption to resolve sometime this year, maybe even as early as September,” Jim Yong Kim, president of the Washington-based organization, told reporters Friday.
“We remain optimistic that the Japanese economy will continue to recover” if the personal consumption returns to a level that was seen before the sales tax was raised to 8 percent from 5 percent in April and Japanese Prime Minister Shinzo Abe implements structural reforms including deregulations, Kim said.
Kim also described Abe’s multiple pledges to increase the employment of women and workers from overseas as “very encouraging.”
The World Bank president made the remarks ahead of his trip to Japan, China and three other Asian countries in July.
Kim backed a China-led project to establish a bank aimed at helping developing counties in Asia build and improve infrastructure. He suggested that China “take advantage” of the World Bank’s 70 years of experience as a lender to developing economies. “Let’s see how we can work even more closely together.”
Kim met with Jin Liqun, a leading member of the envisioned Asia Infrastructure Investment Bank, in March in Jordan.
Chinese President Xi Jinping last year proposed establishing an AIIB and many Asian countries have shown interest in the bank, which China says would start out with initial capital of $50 billion.
China has not invited Japan and the United States, major donors to the Asia Development Bank, to the project, fueling speculation China wants to use the bank as a tool to expand its influence in Asia.
Kim said the World Bank “completely” agrees to China’s position that the AIIB and the existing international development banks will be “complimentary and cooperative.”
In Japan, Kim will meet with political leaders and officials of the Japan International Cooperation Agency for talks on issues such as aid to Myanmar.
Kim said he looked forward to holding talks with Japanese officials on “disaster risk management,” based on their experience with the March 2011 mega-quake and tsunami, and universal health coverage.
According to the World Bank, Kim will visit China first before taking in Japan, the Philippines, Vietnam and Singapore during his July 7 to 18 tour.