TOKYO (REUTERS) - Japanese Prime Minister Shinzo Abe said on Sunday he remained "neutral" on whether to proceed with a hike in Japan's sales tax to 10 per cent, adding that decision would hinge on the strength of economic indicators for the current quarter.

"The economy is a living thing and we are thinking about this in a neutral way," Abe told public broadcaster NHK.

Abe has to decide by the end of the year whether to proceed with a previously approved plan to raise the consumption tax to 10 per cent from 8 per cent in 2015 after a hike from 5 per cent in April sent consumption into a sharp contraction.

Abe said in an NHK interview he wanted to see how the economy performs in the July to September quarter after GDP contracted by 7.1 per cent in the April to June quarter as a result of the previous tax increase. "We would like to get economic indicators from the quarter and hear the views of economists. As part of that process, we will decide whether to proceed with the tax hike as now set by law or whether to wait. That's the discussion we need to have,"Abe said.

Abe said his goal is to restore growth to the world's third-largest economy and end 15 years of deflation. At the same time, he has pledged to curb government debt, which is well over twice the size of GDP, the heaviest debt burden in the industrial world. "We have no alternative but to aim to spur growth even as we get public finance on a healthier footing," Abe told NHK.