Facing trade threats from the US, Japanese Prime Minister Shinzo Abe kept his cool today and note that trade fights do not benefit any country. Japan is clearly the next trade target of Trump, who pull out of the Trans Pacific Partnership as the first “achievement” after taking office. Japan has been clear in insisting on promoting multilateral frameworks despite requests from the US on bilateral trade deals. Trump warned on Friday that “if we don’t make a deal with Japan, Japan knows it’s a big problem.”
Additionally, Abe would proceed with the planned sales tax hike in October 2019 and carry out fiscal reforms. He said that “we will carry out fiscal consolidation and want to raise the sales tax as planned” to 10 percent, in a kick off news conference for his LDP leadership campaign. Abe added that he’s learned a lesson from the 2014 sales tax hike and pledge with measures to ease consumptions.
Released from Japan today, Q2 GDP was finalized at 0.7% qoq, revised up from 0.5% qoq. GDP deflator rose 0.1% yoy, unrevised. Current account surplus narrowed to JPY 1.48T in July.
