Japan’s quarter-on-quarter GDP shrinks 6.3% — the biggest slide since a previous tax increase in 2014
As the coronovirus spreads, Prime Minister Shinzo Abe may have to consider another round of extra spending to support growthTokyo — Japan’s economy lurched towards a possible recession after taking another battering from a sales-tax hike in the last quarter that left it at a low ebb as the coronavirus outbreak hit activity at the start of 2020.
The result also raises the possibility that with the coronavirus outbreak still spreading, Prime Minister Shinzo Abe may have to consider another round of extra spending to support growth, little more than two months after his most recent stimulus package. But economists said some of the government steps, such as rebates on spending via cashless transactions, had limited affect as they didn’t appeal to an older segment of the population not used to cellphone payment platforms.
Businesses also scaled back investment by 14%, preferring to wait for signs of a recovery from the tax shock before committing to further spending. Government officials stuck to their line that the tax affect on the economy was smaller this time than in 2014, but hinted that more spending could be in the pipeline if a slump looked certain.
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