Japan Unexpectedly Enters Recession as Abe Weighs Tax: Economy
By Keiko Ujikane and Toru Fujioka Nov 17, 2014 4:39 AM ET
Japan unexpectedly sank into a recession last quarter as the world’s third-largest economy struggled to shake off the impact of an April sales-tax boost, raising the odds of a delay in a second bump in the levy.
Gross domestic product shrank an annualized 1.6 percent in the three months through September, a second straight drop -- matching the textbook definition of a recession. Unadjusted for price changes, the economy contracted an annualized 3 percent, the Cabinet Office said. Japanese stocks slumped.
“No part of Japan’s economy looks encouraging,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute, who had the weakest forecast in a Bloomberg News survey, with a 0.8% growth estimate for real GDP. “Today’s data will leave another traumatic memory for Japanese politicians about sales tax hikes.”
For Prime Minister Shinzo Abe, the report probably guarantees he will put off the tax increase scheduled for October 2015, a move that people familiar with the matter have said will trigger a snap election next month. Japan also tipped into a recession after a 1997 consumption-levy rise, leading to the fall of the government of the day.
Abe today told reporters that the GDP figures weren’t good and that he’d decide on next year’s sales tax after careful analysis.
more:
http://www.bloomberg.com/news/2014-11-16/japan-s-economy-unexpectedly-contracts-as-abe-weighs-tax-delay.html
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