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Concerns about Abenomics growth strategies – Nomura

FXStreet (Barcelona) - The Research Team at Nomura note investor’s concerns about delay in the growth implementation strategies despite PM Abe’s statement of focusing on economic problems.

Key Quotes

“To be sure, we think a snap election would lead to some growth strategy-related bills currently being debated at the Diet being delayed. Specifically, the three growth strategy-related bills currently being discussed in the Diet”

“In regard to the LDP's outline of tax system reforms, we think debate will heat up after the election and if the LDP wins and retains power, the details would likely be issued sometime in January.”

“We think the ordinary session of the Diet to be convened in 2015 would likely prioritize debate on the supplementary budget and the bill to decide the date of the next consumption hike.”

“In other words, these growth strategy-related bills would be passed around six months later than in the case where the Lower House was not dissolved”

“Postponing the next consumption tax hike until April 2017 would result in the state losing around ¥5.5trn in revenues expected from the tax hike in FY15–16 (¥1.5trn in FY15 and around ¥4.0trn in FY16). It might then become difficult to implement all the growth strategy programs that had been formed on the assumption that additional revenues would be available for use.”

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