Japan’s Nishimura Says Virus May Be Worse Than Financial Crisis

(Bloomberg) -- The effect of the new coronavirus on the economy could be worse than the 2008 financial crisis, Japan’s Economy Minister Yasutoshi Nishimura said Sunday.

Speaking on Fuji Television, Nishimura called for strong measures to protect the economy, and said proper consideration should be given to whether reducing sales tax would bolster consumption.

Japan’s economy was already teetering on the brink of recession when the effect of the virus began to kick in, partly due to an increase in sales tax to 10% in October from the previous 8%. Some have called for the increase to be reversed to help encourage consumption.

“This may be on a par with the Lehman shock, or even worse,” Nishimura said. “We need measures on the same scale, they should be bold and not limited by what’s been done before.”

His comments came after Hiroshige Seko, a senior lawmaker with the ruling Liberal Democratic Party, said cutting taxes was one option, while adding that returning sales tax to its previous level would be difficult.

Seko said nothing should be ruled out of discussions and mentioned the possibility of expanding an existing rebate system on purchases. Economic measures should be designed to increase consumption, he said.

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