“NO SOONER does the Japanese economy raise its head from the mat than it falls down again.” So wrote one longtime Japan-watcher last month on the news that, after zooming along at a real annualised rate of 3.9% in the first quarter, GDP may well have contracted during the second. Preliminary data will be released on August 17th.
This is the year that the economic plan of Shinzo Abe, the prime minister, should be taking wing. The negative effect on consumer demand of a rise in the consumption tax in April 2014—the economy tipped into recession afterwards—is by now safely past. Meanwhile a drop in oil prices has been a boon for household budgets.
Yet the economy’s performance has been underwhelming. The problems have been weak industrial production, thanks to a slowdown in exports to America and China, and anaemic household consumption. In a recent report on Japan, economists at the IMF attributed some of consumers’ reluctance to open their purses to their worries about how Japan’s dire fiscal position—debt now stands at 246% of GDP—could affect their future income. Companies and...Continue reading
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