Japan's in recovery mode, says Chief Cabinet Secretary Suga

Japan's Chief Cabinet Secretary Yoshihide Suga speaks during a press conference at the Foreign Correspondents' Club of Japan in Tokyo on July 11, 2014. -- PHOTO: AFP
Japan's Chief Cabinet Secretary Yoshihide Suga speaks during a press conference at the Foreign Correspondents' Club of Japan in Tokyo on July 11, 2014. -- PHOTO: AFP

TOKYO (REUTERS) - Japan's Chief Cabinet Secretary Yoshihide Suga said on Saturday that Japan's economic recovery remained underway, citing Prime Minister Shinzo Abe's "Abenomics" economic policies as a major factor.

Japan's economy grew rapidly in the first quarter, though economists expect to see a sharp contraction, the first in almost two years, when second quarter gross domestic product data is released on Aug. 13.

"Without a doubt, the economy is in recovery mode," Mr Suga told  an audience at an event in Tokyo hosted by Japan Akademeia, a non-partisan organisation.

The GDP data is expected to show the economy shrank at an annualised 7.1 per cent in the second quarter, according to the median forecast in a Reuters poll of 25 economists.The economy was dragged down in the April-June quarter by weaker-than-expected consumer spending after a sales tax hike and disappointing factory output, a Reuters poll showed. Exports, a main driver in the economy, also remained sluggish.

Bank of Japan Governor Haruhiko Kuroda made a spirited defense of the economy's performance on Friday after a recent run of weak data.

Mr Suga stressed the government's intention to support an economic recovery to pull the economy out of a long phase of deflation.

He said the government planned to increase the investment limit from 1 million yen for individuals using the new tax-free savings scheme Nippon Individual Savings Account (NISA) to invest in stocks and mutual funds.

Mr Suga also said the reform of the giant Government Pension Invesment Fund Investment Committee (GPIF), which oversees Japan's public pension fund, will "move faster than scheduled." "By executing all of these with speed, we want to get out of deflation and accomplish financial reform," Mr Suga said.