Japan slides into recession as tax hike takes toll By ELAINE KURTENBACHAP Business Writer TOKYO (AP) – Japans economy unexpectedly shrank in the third quarter as housing and business investment declined following a tax hike, dragging the country into a recession and further clouding the outlook for the global economy. The worlds third-largest economy contracted at a 1.6 percent pace in the July-September quarter, the government said Monday, contrary to predictions it would grow after a big drop the previous quarter. The surprise deepens uncertainty when Chinas growth is slowing and the 18-country eurozone grew only 0.2 percent in the same quarter. The gross domestic product figures showed across-the-board weakness in demand among consumers, manufacturers and builders. Many individuals and companies had spent money before the sales tax was hiked in April from 5 percent to 8 percent, and spending has languished since then. “The impact of the sales tax was much more severe than expected,” said Junko Nishioka, an economist at RBS Japan Securities. Housing investment plunged 24 percent from the same quarter a year ago, while corporate capital investment sank 0.9 percent. Consumer spending, which accounts for about two-thirds of the economy, edged up just 0.4 percent. Given the contraction, Prime Minister Shinzo Abe is expected to [...] newsinmi/japan-slides-into-recession-as-tax-hike-takes-toll/
Posted on: Mon, 17 Nov 2014 07:45:19 +0000
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