The economy is likely to grow between July and September at a pace consistent with plans to complete the doubling of the consumption tax to 10 percent in October 2015, a government-affiliated nonprofit group said in a survey.
The Japan Center for Economic Research said in a survey released Thursday that it expects Japan’s gross domestic product to expand by an annualized rate of 2.7 percent in real terms during the third quarter, based on the average prediction of 42 economists.
The expected growth would follow the 4.9 percent economic contraction forecasted for the April to June quarter after a 3-point rate hike raised the tax to 8 percent on April 1. Some experts say the hike is taking a toll on private spending and industrial production.
Legislation enacted in 2012 stipulates that the government will seek to attain nominal economic growth of around 3 percent and real growth of about 2 percent as a nonbinding target in proceeding with the two-stage tax hike, which is aimed at covering swelling social security costs for Japan’s graying population and reducing the nation’s alarming fiscal debt.
Prime Minister Shinzo Abe has pledged to make a final judgment on whether to carry out the second stage of the tax hike by the end of this year, after assessing economic indicators to be released through December, including the revised July to September GDP data.
If the economy achieves 2 percent growth in the three months through September, Abe will be expected to go ahead with the second tax hike to accelerate efforts to restore Japan’s fiscal health, which is the worst among the major developed nations, according to the economists that were surveyed.