Japan Slides into Recession

by Marilou Moursund on November 18, 2014

in Foreign Markets,Geopolitical,inflation/deflation

Japan’s second quarter GDP fell -1.6% after falling -7.3% in the first quarter. U.S. markets rallied sharply

in October after Japan announced more efforts to stimulate their economy. Prime Minister Abe has now announced that the planned hike in the consumption tax to 10% will be postponed. From the linked article: The release earlier Monday of data showing the Japanese economy unexpectedly contracted for a second straight quarter in the July-September period prompted the Abe government and ruling coalition to agree to dissolve the House of Representatives later this week for the election, political sources said. The preliminary gross domestic product data for the past quarter “were unfortunately not so good figures,” Abe said at a function hosted by the Komeito party, the junior partner of the Liberal Democratic Party in the ruling coalition. “We cannot miss a chance to get the economy out of deflation,” he said, in apparent reference to the potentially negative impact on the economy if the consumption tax were raised again as planned. Under a 2012 law, the consumption tax was set to rise to 10 percent in October 2015, following a 3-percentage point increase to 8 percent in April, which caused the world’s third-largest economy to sink into recession over the six months through September.

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