The effects of the scheduled consumption tax hike and sudden market changes warrant careful vigilance so that the Bank's monetary policy will not fall behind the curve.
海外経済の減速に加えて、消費税率引き上げの影響等に注意が必要である。
In addition to the slowdown in overseas economies, such factors as the effects of the scheduled consumption tax hike warrant attention.
Following a likely decline in the secondhalf of fiscal 2019 due to the effects of the consumption tax hike, private consumption and housing investment are expected to head gradually toward a recovery in fiscal 2020.
Thereafter, until early 2015,partly due to the effects of the consumption tax hike, the positive contribution of the CPI excluding energy-- and also excluding the direct effects of the consumption tax hike-- shrank.
In FY2016, the growth rate is anticipated to be as high as1.5% in view of last-minute demand prior to the consumption tax increase in April 2017, but negative growth of -0.3% is expected in FY2017 due to a reactionary fall in demand.
Effects of the consumption tax hikes At the beginning of October 2013, the government decided to raise the consumption tax rate to 8 percent in April 2014 as initially scheduled.
The year-on-year rate of change in real income of employees as a whole,excluding the effects of the consumption tax hike, has also been positive for nine consecutive months since March 2014 Chart 13.
Amid heightening uncertainties in the global economy, the government would take all possible measures to manage the economy by swiftly executing the budget andtaking countermeasures worth 2.3 trillion yen pursuant to the consumption tax increase.
Accompanied by the consumption tax hike in April this year, it is estimated that the year-on-year rate of increase in the CPI excluding fresh food has been pushed up by about 2 percentage points, but this will disappear next fiscal year.
As for the effects of the consumption tax hike on private consumption, since the size of front-loaded purchases was large, the size of the subsequent decline in demand was substantial and effects of this decline have been prolonged.
With the employment and income situation improving steadily, private consumption has remained resilient as a trend,and the effects of the decline in demand following the consumption tax hike have gradually begun to wane.
It is said that an increase in demand prior to the scheduled consumption tax hike has been seen in part, including sales of automobiles and household electrical appliances, but it seems only marginal compared with that of the previous hike..
The adverse impact of the tax hike turned out to be greater than projected-- perhaps because it was difficult to grasp the structural changes in the economic and social structures that occurred after the previous tax hike in 1997.
Many firms attempted to raise their sales prices at the beginning of last fiscal year,but this coincided with the consumption tax hike, which was followed by a decline in demand.
The Consumer Price Index for the 2015 fiscal yearis forecast at 2.5%(1.8% excluding the influence of the consumption tax rate increase), and it is expected that the 2% inflation target will be nearly achieved in approximately 2 years.
Partly due to last-minute demand prior to the raise of the consumption tax rate(from 5% to 8%) from April 1, 2014, personal consumption, housing investment, and capital investment increased.
If a rebound from a last-minute surge in demand amplifies changes in personal spending,personal spending may fall sharply immediately after a consumption tax hike, which may affect the business performance and financial condition of the Group.
This-- together with a front-loaded increasecaused by an expected rise in the consumption tax hike scheduled in April 2014-- has contributed to a resilient performance in private consumption and housing investment Chart 18.
In 2014, we were tossed about by the impact of the Consumption Tax hike, but even under such circumstance, sales of high-priced vehicles and new models with added values did not fall.
Attention needs to be paid to such factors as the slowdown in overseas economies andthe effects of the scheduled consumption tax hike in fiscal 2019, as well as a peak-out of Olympic Games-related demand and developments in the IT sector from fiscal 2020 onward.
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