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. 


Bank jobs go as HSBC and Emirates NBD reduce costs

Updated 15 November 2019

Bank jobs go as HSBC and Emirates NBD reduce costs

  • Others have also reduced headcount amid economic downturn and property market weakness

DUBAI: HSBC Holdings has laid off about 40 bankers in the UAE and Emirates NBD is cutting around 100 jobs, as banks in the Arab world’s second-biggest economy reduce costs.

The cuts come amid weak economic growth, especially in Dubai, which is suffering from a property downturn.

HSBC’s redundancies came after the London-based bank reported a sharp fall in earnings and warned of a costly restructuring, as interim CEO Noel Quinn seeks to tackle its problems head-on.

HSBC has about 3,000 staff in the UAE, part of a nearly 10,000-strong workforce in the Middle East, North Africa and Turkey.

The cuts at Dubai’s largest lender Emirates NBD came in consumer sales and liabilities, one source said, while a second played down the significance of the move.

HSBC and Emirates NBD declined to comment.

“The cuts are part of cost cutting and rationalizing to drive efficiencies in a challenging market,” the second source said.

Other banks have also reduced staff this year. UAE central bank data shows local banks laid off 446 people in the 12 months until the end of September. Foreign banks added staff in the same period.

Staff at local banks account for over 80 percent of the 35,518 banking employees in the country.

The merger between Abu Dhabi Commercial Bank, Union Commercial Bank and Al Hilal Bank saw hundreds of redundancies.

Commercial Bank International (CBI) said it would offer voluntary retirement to employees in September, which sources said saw over 100 departures. Standard Chartered, too, cut over 100 jobs in the UAE in September.

Rating agency Fitch warned in September a weakening property market would put more pressure on the UAE’s banking sector.