Japans
economy shrank for a second consecutive quarter, with the unexpected
contraction increasing the odds Prime Minister Shinzo Abe will postpone a
sales-tax increase.
Gross
domestic product shrank an annualized 1.6 percent in the three months
through September, the Cabinet Office said today in Tokyo, compared to
the median forecast for 2.2 percent growth in a Bloomberg News survey of
economists. Unadjusted for price changes, the economy contracted an
annualized 3 percent.
Abes
administration is seeking to shore up public support after Aprils levy
increase triggered the deepest contraction in more than five years.
Etsuro Honda, an adviser to the prime minister, said last week a tax
increase is out of the question if growth is less than 3.8 percent.
The
3 percentage point increase in the sales tax in April has pushed up the
cost of living, straining households that are pressured by rising
prices as the central bank pumps record stimulus. With inflation
outpacing wage growth, a further bump in the levy slated for next
October risks hurting consumption and undermining Abes support.
Source : Bloomberg
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