BOJ policymaker dismisses pessimistic view on consumption tax hike

A Bank of Japan policymaker on Thursday shrugged off the possibility that the April consumption tax hike could significantly slow the nation's economy, bolstering confidence toward the central bank's bright projection.

"Although being affected by strong demand before and a decline (in demand) following (the tax hike), the economy will continue to grow at a pace beyond its potential without being weighed down," Yoshihisa Morimoto, a member of the bank's Policy Board, said at a meeting with business leaders in Akita Prefecture, northeastern Japan.

The BOJ has said the economy is expected to continue a moderate recovery while being affected by the consumption tax hike on April 1, which raised the rate to 8 percent from 5 percent amid fears it could weaken household and business spending and suppress the country's nascent economic recovery.

The bank also believes the adverse effects of the tax increase on the economy will fade from this summer at the earliest.

"While individual consumption remains solid on improving employment and income situations, we believe exports and business fixed investment will also increase moderately as a trend," Morimoto said.

But he also pointed out that as more Japanese manufacturers have shifted their production abroad, exports have weakened recently, and that the scenario of a moderate recovery in exports has downside risks such as a possible slowdown in overseas economies, particularly emerging market countries.