Japan’s government and central bank should boost stimulus if the economy fails to grow again this quarter, said an adviser to Prime Minister Shinzo Abe.
Further monetary easing and fiscal steps will be needed if the world’s third-biggest economy treads water or contracts in the three months through September, Koichi Hamada, 79, said in an interview at the prime minister’s residence in Tokyo.
“The second-quarter GDP numbers weren’t good. If this continues for another quarter then it is hard to blame seasonal factors,” said Hamada.
The former Yale professor was referring to a 1.6 percent annualized contraction in gross domestic product in the April-June period as consumers and businesses cut spending, and exports tumbled. Hamada also said the Bank of Japan should add stimulus if China’s policies that have devalued the yuan lead to excessive strength in the yen.
The Japanese currency has swung rapidly this week, with a China-induced rout in global stocks lifting trader expectations of price swings in the yen against the dollar by the most since the March 2011 tsunami. Stocks plummeted Tuesday in the wildest trading day in four years.
“There is too much panic over the global stock rout and currency fluctuations,” Hamada said. “Until the effects and the causes become clear, policy makers and investors needn’t act hastily.”