Yikes! Everyone already knew Japan’s economy performed miserably in the second quarter, but new figures released today show that the country’s economic contraction was even worse than initially thought. The reason for the poor performance: a sales tax increase that went into effect in April.
The overriding factor for the shrinkage in the economy in the April-June quarter remained unchanged between the first and the second preliminary estimate. It was the sudden slump in private consumption, a decline of 5.1% qoq, that brought down the Japanese economy in the quarter. After the sales tax hike to 8% this April, consumers sharply pulled back from their spending. [Emphasis added.]
So what do Japan’s political leaders want to do? Why, raise the sales tax again.