Japan’s economy: Shock drop

Posted: November 17, 2014 in economy
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Japan's economy


A surprise recession complicates Shinzo Abe’s rumoured election plans





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IN 1997 a rise in the consumption (value-added) tax stopped an economic recovery in its tracks. Now another rise in the unpopular tax has again caused a recession in Japan. The data, published on November 17th, came as a shock to the government, even though prime minister Shinzo Abe and his close advisers had warned of weak growth. Preliminary figures showed that Japan’s real, annualised GDP shrank by 1.6% in the third quarter, after contracting by 7.3% in the April-June period immediately after the tax went up, from 5% to 8% (see chart).

Most economists had forecast an expansion of around 2% for the quarter. The chief drag on growth proved to be falling inventories, as firms reduced production in the face of weak …

via Economic Crisis http://ift.tt/1viAit7


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