The declaration by Group of Seven leaders who gathered in the Ise-Shima area of Mie Prefecture seemed to contain an all-inclusive recipe to deal with the challenges facing the world economy. The statement adopted Friday at the end of the two-day annual summit says the leaders commit to "using all policy tools — monetary, fiscal and structural — individually and collectively" while "continuing our efforts to put debt on a sustainable path." The leaders pledged to strengthen their policy responses "in a cooperative manner and to employing a more forceful and balanced policy mix" to "swiftly achieve a strong sustainable and balanced growth pattern" while "taking into account country-specific circumstances." In short, each of the G-7 economies will make its own policy choice as it sees fit.
Prime Minister Shinzo Abe, who hosted the summit, warned fellow G-7 leaders the previous day that the global economy is "at a risk of falling into a crisis" on the scale of the 2008 Lehman shock unless appropriate policy responses are taken in a timely manner, noting that weak data such as the steep fall in world commodity prices and sluggish investment growth in emerging economies resemble the situation before and after the crisis triggered by the collapse of Lehman Brothers. But his assessment did not appear be shared by all.
Abe's statement was widely taken as a cue that he was trying to use the G-7 summit discussion as the backdrop for a possible decision as early as next week to shelve the April 2017 consumption tax hike — ahead of the Upper House election scheduled in July. After he first postponed the tax hike in 2014, he kept saying that he would not delay the hike further unless there was a crisis on the level of the Lehman shock and the 2011 Great East Japan Earthquake. Whether or not his assessment of the risk of a global economic crisis was appropriate as the summit chair is another question.