Prime Minister Shinzo Abe is working on a new fiscal stimulus plan, turning to a time-tested tool of Japanese policymaking. It's a shame the country needs a new round of pump-priming, given one of Abe's great achievements had been to shake loose the nation's reputation as an economic failure. Now, an ill-advised consumption tax hike is looming over his legacy.
In October, when the new consumption tax rate took effect, retail sales fell a record 14.4 percent from the previous month, putting gross domestic product on course for a steep contraction this quarter. Industrial production has also slumped far more than anticipated, according to a government report Friday.
The dismal data, and the impact of punishing typhoons, have fed speculation about the size of a spending package likely to be announced this month. The latest media reports show that the stimulus package would be worth ¥13 trillion. That would be the heftiest outlay since the devastating 2011 tsunami.