Press Conference by the Chief Cabinet Secretary (Excerpt)

Q&As

• The Japanese economy (Preliminary GDP figures for the period between July and September)

(Abridged)

REPORTER: The topic was also raised at a meeting of the Budget Committee earlier; however preliminary GDP figures have revealed severe contraction at an annualized rate of 3.5% for the period between July and September. Some market players have pointed out that in light of the current state of the economy, the raising of the consumption tax rate scheduled to begin in April 2014 may have to be delayed. Could you share with us how the Government views the current state of the economy in relation to creating the right environment for the hike in consumption tax?

CHIEF CABINET SECRETARY FUJIMURA: I believe that the slowing of the global economy is a significant factor behind these results. Preliminary GDP figures for the period between July and September demonstrate that the Japanese economy is showing signs of slowing. In terms of the outlook for the Japanese economy, due to the slowing of the global economy, the contribution by external demand has remained weak or is expected to be weak and therefore movements toward economic recovery would pause for the time being. However, steady implementation of reconstruction measures is hoped to prop up the economy and sometime next year we also expect a mild upturn in the global economy. Therefore, we are still hopeful, in terms of a general outlook, that the Japanese economy will also be able to make a mild recovery. You also asked about the state of the economy in relation to consumption tax increases. The Fundamental Reform of the Taxation System Act establishes that prior to increasing consumption tax, a range of factors must be considered by the Government at that time before a rate increase can be implemented. I believe that what is important now is that, in order to ensure market confidence in pension reserves and public finance, we create the right economic environment to allow consumption tax to be increased as scheduled.

REPORTER: I would like to ask a question on a related topic. I would like to ask if the current state of the economy has any influence on the decision to dissolve the Diet. Also, how does the Government view the fact that political vacuum may be created while the economy is in decline?

CHIEF CABINET SECRETARY FUJIMURA: As I have already stated a number of times, the Government is implementing economic measures, the first of which being the decision to utilize Government reserves, announced on October 26, and the second of which is currently in development and to be finalized by the end of the month. In addition to these measures, the Government and the Bank of Japan released a joint statement of common understanding that expressed our determination to work closely together to break out of deflation. In light of this, I view that the Government is taking comprehensive and appropriate actions.

(Abridged)