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Japan’s Economy Shrinkage Worse Than Reported
Japan's economy shrank by an annualized 7.1% in April-June, not the 6.8% reported last month, according to the government's Cabinet Office.
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Japan's economy shrank by an annualized 7.1% in April-June, not the 6.8% reported last month, according to the government's Cabinet Office.
It was the strongest quarterly contraction in more than five years. Retail sales and household spending, which account for about 60% of Japan's economy, continued to shrink in July.
Economists blame the slump on the increase in Japan's consumption tax to 8% in April from 5%, where it had been for the previous 17 years.
The tax is scheduled to climb to 10% in October 2015. But the government says it won't take that step without first stimulating the economy. Prime Minister Shinzo Abe is expected by year-end to decide what steps to take.
Other government figures show capital investment and private consumption each plunged 5.1% in April-June from the previous quarter. Economists note that the declines contrast with above-normal purchasing in January-March as companies and consumers rushed to beat the tax hike.
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