International Coverage | TKNN
Data from the Japanese Cabinet Office shows that the Japanese economy contracted for the third quarter. This was the second-straight quarter of negative growth, fitting the definition for a recession.
The Japanese economy shrank 2.2%, as opposed to the 1.6% growth that was expected.
The latest GDP report could have large ramifications for Japanese politics. Prime Minister Abe has been putting an economic package through and his reforms are known as “Abenomics.” Legislation had initiated a sales tax hike to 8 percent from 5 percent. An increase to 10 percent is planned, but Prime Minister Abe is expected to call for snap elections and use the new parliament to delay the increase. Abe does have the permission to call for snap elections and dissolve the Diet, or the Japanese Parliament. The sales tax increases were thought of as a way to bring down Japan’s high national debt. However, private consumption has also fell along with the GDP.