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Abe warns G7 leaders on risk of Lehman-scale crisis

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Japanese Prime Minister Shinzo Abe answers questions during a short press interview at his official residence in Tokyo (Kazuhiro Nogi, AFP)
Japanese Prime Minister Shinzo Abe answers questions during a short press interview at his official residence in Tokyo (Kazuhiro Nogi, AFP)

Tokyo - Japanese Prime Minister Shinzo Abe presented documents to his fellow Group of Seven leaders on Thursday that he said indicated a risk of the world economy falling into a crisis on the scale of the 2008 Lehman shock, if appropriate policy measures weren’t taken.

Abe presented documents showing that commodity prices had fallen by 55% between 2014 and January 2016, similar to the margin by which they fell in 2008-2009, among other data. The presentation at the summit in Mie Prefecture in central Japan could play into domestic economic policy, as Abe has frequently said that he would proceed with a planned increase in the sales tax in April 2017 unless there is an event on the scale of the Lehman shock or a major earthquake.

Still, Abe also has convened economic advisory panels where calls for a delay were aired. The narrative among a number of Abe advisers and Japan economists for months has been that the prime minister would use his leadership of the G7 this year to help shape a decision to put off the boost in sales tax, which led to a recession when it was raised in 2014.

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