Japanese Prime Minister Shinzo Abe said on Tuesday that he would call an early election to seek a fresh mandate for his economic policies, and postpone an unpopular sales tax rise, a day after data showed the economy had slipped back into recession.
The world’s third-biggest economy unexpectedly shrank for a second consecutive quarter in July-September, a sign the pain from an initial rise in the sales tax to 8 percent from 5 percent in April was lasting longer than expected.
Abe said he would delay a second increase to 10 percent that had been scheduled for October 2015 for 18 months. He added he would dissolve the lower house on Friday for an election that must be held within 40 days. The vote is expected on Dec. 14.
The prime minister – who returned to power in December 2012 pledging to revive growth with a radical mix of hyper-easy monetary policy, spending and reform – insisted his policies were working and challenged the opposition to come up with an alternative.
“I am aware that critics say ‘Abenomics’ is a failure and not working but I have not heard one concrete idea what to do instead … Are our economic policies mistaken, or correct? Is there another option?” he asked at a televised news conference. “This is the only way to end deflation and revive the economy.”
