The Japanese economy slipped into recession in the third quarter, a surprisingly poor performance that could delay a planned sales tax hike.
Gross domestic product shrank by an annualized 1.6% in the three months ended September, Japan’s Cabinet Office said Monday. The result was much worse than the 2.2% expansion expected by economists.
On a quarterly basis, Japan’s GDP declined by 0.4% as business investment slipped. Economies are considered to be in recession after two straight quarters of contraction.
The disappointing result comes as Japan faces a full slate of critical questions over taxes and economic policy.
Japan’s consumption tax was increased to 8% in April in a bid to improve the country’s fiscal position, and the government is now agonizing over whether it should implement an additional bump to 10%. The first increase set off a boom and bust cycle that wiped out growth in the second quarter, as consumers drastically changed their spending patterns. CNN
