Abe pledges further efforts to boost Japanese economy

Japanese Prime Minister Shinzo Abe pledged to expand efforts to fight the country's decades- old deflation, announcing his resolve to implement an all-out growth strategy.

Abe made the remarks at the opening of an extraordinary Diet session, which would last 53 days since Oct. 15. He started with an evaluation of the current economic situation, saying that the country's economic recovery has yet to be truly felt.

"We are only halfway through our efforts to beat persistent deflation," said the prime minister, who has vowed to revive the economy through massive monetary easing and fiscal stimulus policies since taking office last December.

His assessment indicated that despite a recent upturn in overall economic performance, he felt there is still more to be done to spread positive sentiment throughout the world's third largest economy.

Talking about the planned sales tax hike from the current 5 percent to 8 percent next April, Abe reiterated its great importance in securing funds for covering swelling welfare costs as Japan's population ages.

Meanwhile, with Japan's public debt standing close to 245 percent of its gross domestic product (GDP), the 7.5 trillion yen (about 76.5 billion U.S. dollars) a year of additional revenue is considered as a small but crucial step.

A recent survey showed that about 53.3 percent of Japanese support the sales tax hike, while 42.9 percent are against.

To moderate the negative impact of the sales tax hike on household and business spending, the Japanese government also approved a parallel economic stimulus package worth 6 trillion yen (61 billion dollars), including 1 trillion yen in tax reductions to lift business investment and cash benefits for low-income earners.

During Tuesday's policy speech, Abe shifted focus to supporting companies willing to raise salaries and expand payrolls, with deregulation, tax breaks and other growth-friendly measures.

On deregulation for growth, Abe told the parliament that he aims to make Tokyo, host of the 2020 Summer Olympics, the "world's most advanced business city" through "thoroughly eliminating peculiar regulations and systems."

The move comes alongside government plans for establishing special economic zones for developing infrastructure and other projects relevant to Tokyo's hosting of the Olympics.

Separately, Japan's Finance Minister Taro Aso repeated a concern on Friday that the current fiscal impasse in Washington may get the Japanese economy hurt, if U.S. lawmakers could not reach an agreement to raise the government's debt ceiling before the deadline of Oct. 17.

"In the worst scenario, there will be a default, which is serious" for Japan, the second largest lender to the U.S. government, said Aso.

"The impact is big at a time when the Japanese economy is about to grow," he was quoted as saying by the Nikkei daily.

Aso urged U.S. lawmakers to be aware of the seriousness of the budget impasse in Washington and its reverberations around the world.