The head of the nation's largest business lobby said Monday it would accept a decision by Prime Minster Shinzo Abe to delay a second consumption tax hike.
Sadayuki Sakakibara, who heads Keidanren, said at a news conference in Nagoya that the organization still believes the Abe administration should raise the consumption tax in October 2015 as planned in order to accelerate fiscal rehabilitation efforts.
But Sakakibara also said that "the business community will understand and accept" if Abe decides to postpone the tax increase. "The prime minister will ultimately make a decision by considering not only the economy but also various factors comprehensively."
Abe will likely make up his mind soon, after looking into Monday's government data showing that the economy unexpectedly contracted in the July-September period for the second straight quarter as it remains hurt by weak consumption following the first tax hike in April.
The possible decision to delay the second hike would be a setback to Japan's international pledge to rehabilitate its fiscal health, the worst among major developed countries.
"It might be necessary (for the administration) to show both within and outside the country a new pathway toward fiscal restoration," Sakakibara said.