NEW YORK ¨C 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.
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