News Column

World Bank expects Japan's consumption recovery possible in Sept.

June 27, 2014

Kakumi Kobayashi

The head of the World Bank said Friday he expects Japan's consumer spending to start recovering around September from a temporary drop linked to the sales tax hike, while also voicing support for a China-proposed investment bank for Asia.

"What we're hearing is that many business leaders expect the effects of the post-tax hike drop in consumption to resolve sometime this year, maybe even as early as September," Jim Yong Kim, president of the Washington-based organization, told reporters.

"We remain optimistic that the Japanese economy will continue to recover" if the personal consumption returns to a level that was seen before the sales tax was raised to 8 percent from 5 percent in April and Japanese Prime Minister Shinzo Abe implements structural reforms including deregulations, Kim said.

Kim also described Abe's pledges to increase employment of women and workers from overseas as "very encouraging."

The World Bank president made the remarks in a press conference ahead of a trip to Japan, China and three other Asian countries in July.

Kim backed a China-led project to establish a bank aimed at helping developing counties in Asia build and improve infrastructure.

Kim suggested China "take advantage" of the World Bank's 70 years of experience as a lender to developing economies. "Let's see how we can work even more closely together."

Kim met with Jin Liqun, a leading member of the envisioned Asia Infrastructure Investment Bank, in March in Jordan.

Chinese President Xi Jinping last year proposed establishing an AIIB and many Asian countries have shown their interest in the bank China says will have an initial capital of $50 billion.

China has not invited Japan and the United States, major donors to the Asia Development Bank, to the project, fueling speculation China wants to use such a bank as a tool to expand its influence in Asia.

Kim said the World Bank "completely" agrees to China's position that the AIIB and the existing international development banks will be "complimentary and cooperative."

In Japan, Kim will meet with the country's leaders and officials of the Japan International Cooperation Agency for talks on issues such as aid to Myanmar.

Kim said he looked forward to discussing with Japanese officials on "disaster risk management" based on their experience of the March 2011 mega earthquake and tsunami, and universal health coverage.

According to the World Bank, Kim will visit first China and go to Japan, the Philippines, Vietnam and Singapore in a trip from July 7 to 18.

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: Japan Economic Newswire

Story Tools Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters