Japan’s Abe pledges economic support steps if risks intensify

Japan's Prime Minister Shinzo Abe. (AFP)
Updated 04 October 2019

Japan’s Abe pledges economic support steps if risks intensify

  • Abe’s pledge to deliver support to the economy echoes that made recently by the Bank of Japan
  • Japan’s economy has slowed as the trade war crippled exports

TOKYO: Japanese Prime Minister Shinzo Abe said on Friday the government was ready to take “all possible steps” if risks to the economy intensified, signaling a fiscal-stimulus boost in the event this month’s sales tax hike triggers a sharp downturn in growth.

Abe’s remark came as the bitter US-China trade war and soft global demand have continued to harm Japanese manufactures, profits and overall economic growth.

Earlier this week, the Bank of Japan’s tankan survey showed business sentiment plummeting to a six-year low in the July-September quarter.

Japan rolled out a twice-delayed increase in the sales tax to 10 percent from 8 percent on Tuesday, a move that is seen as critical for fixing the country’s tattered finances but may hurt the economy by dampening consumer sentiment.

“Achieving economic growth remains my administration’s top priority,” Abe said in a speech delivered to an extraordinary parliament session that convened on Friday.

“If downside risks materialize, we will take all possible steps flexibly and without hesitation to ensure the economy is on a growth path,” he said.

Abe’s pledge to deliver support to the economy echoes that made recently by the Bank of Japan, which kept monetary policy steady last month but signaled its readiness to expand monetary stimulus as early as its Oct. 30-31 meeting.

Japan’s economy has slowed as the trade war crippled exports, though robust capital expenditure and household spending have helped prevent a recession.

Government officials have said the hit to consumption from the sales tax hike would likely be moderate, as households did not front-load purchases ahead of the higher levy as much as they did at the previous hike in 2014.

The government has offered vouchers and tax breaks in an effort to avoid a repeat of 2014, when an increase in the tax rate to 8 percent from 5 percent tipped the economy into recession.

But BOJ Governor Haruhiko Kuroda has warned that the central bank must carefully watch how the tax increase could affect consumer sentiment, adding that it was ready to ease monetary policy further if risks intensify.

A BOJ board member with a casting vote on policy decisions also said on Thursday the bank must consider “preventive steps” against risks, a sign its board may be tilting toward further easing as global pressures intensify. 


Saudi Arabia plans $110bn investment in Al-Jafurah unconventional gas field

Updated 15 min 47 sec ago

Saudi Arabia plans $110bn investment in Al-Jafurah unconventional gas field

  • Al-Jafurah deposits are estimated to hold 200 trillion cubic feet of wet gas
  • Al-Jafurah is southeast of Ghawar, the world’s largest conventional oilfield

RIYADH: Saudi Aramco plans to invest $110 billion to develop unconventional gas reserves in Saudi Arabia’s Al-Jafurah field, Saudi Press Agency (SPA) reported on Friday.

The development plans were reviewed by the Saudi High Commission for Hydrocarbons in a meeting chaired by Crown Prince Mohammed bin Salman.

The Al-Jafurah deposits are estimated to hold 200 trillion cubic feet of wet gas and the phased development of the field is expected to gradually increase production to 2.2 trillion cubic feet by 2036 if fully completed, SPA said.

The crown prince said development of the field over 22 years would provide the government with an annual net income of $8.6 billion and contribute $20 billion to the kingdom’s gross domestic product per year, according to the agency.

The field is expected to produce 130,000 barrels per day of ethane and 500,000 bpd of gas liquids and condensates.

Al-Jafurah is southeast of Ghawar, the world’s largest conventional oilfield.

Unconventional gas refers to reserves requiring advanced extraction methods, such as those used in the shale gas industry.

SPA said the crown prince ordered gas produced from Al-Jafurah to be prioritized for domestic industries, including mining, to support the Kingdom’s Vision 2030 development plan.

(With Reuters/SPA)