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BUSINESSMonday 15 February 2016
Japan’s economy contracts in latest setback for Abe recovery
ELAINE KURTENBACH In this Nov. 17, 2015, file photo, a shopper walks past a clothing shop display at a shopping street than other faster growing
AP Business Writer of Ginza area in Tokyo. economies in Southeast
TOKYO (AP) — Japan’s Asia and elsewhere.
economy contracted at a Associated Press Consumer demand fell
1.4 percent annual pace more than expected in
in the last quarter as weak Japan’s central bank has ally uninterested in borrow- ing down excess capac- the last quarter, dipping
consumer demand and already resorted to impos- ing. ity built up during decades to a four-year low, offset-
slower exports battered ing negative interest rates Growth also has been of fast growth, and have ting moderate growth in
the recovery. on some bank deposits it stunted by slow increases in held back on domestic in- business investment, said
The preliminary data, holds to help spur more wages, which leave house- vestments, viewing their Marcel Thieliant of Capital
which may be revised, lending, though cash-rich holds less inclined to spend. shrinking and aging home Economics.
were slightly worse than companies appear gener- Companies are still draw- market as less attractive He expects consumer de-
expected and were a set- mand to perk up in com-
back from the 1.3 percent ing months, in anticipation
expansion in the previ- of a sales tax hike, to 10
ous quarter. The economy percent from 8 percent, in
shrank 0.4 percent in Oc- April 2017.
tober-December from the “However, this should be
previous quarter. short-lived, as activity will
Despite the lackluster re- almost certainly slump
port, Tokyo’s main share in- once the tax has been
dex, the Nikkei 225, jumped raised,” Thieliant said. “The
4.4 percent to 15,615.84 upshot is that the Bank of
in early trading Monday, Japan still has plenty of
helped by a weakening in work to do to boost price
the Japanese yen. pressures.”
The latest contraction, the Despite the zigzags in
second in 2015, adds to growth last year, the econ-
worries that Prime Minis- omy eked out a 0.4 per-
ter Shinzo Abe’s strategy cent expansion in 2015,
for reviving the economy better than the flat-lining
through inflation fueled by of 2014. But that pace of
massive monetary easing is growth falls far short of
not delivering as promised. the expansion needed to
The slowdown in China, achieve Abe’s goal of a
one of Japan’s biggest ex- 600 trillion yen ($5.3 trillion)
port markets, has been a economy by 2020.
further hindrance. With the Japanese cur-
rency at a level of about
113.5 yen to the dollar, and
some economists forecast-
ing it could rise further as
investors seek refuge from
financial market volatility in
a traditional “safe haven,”
corporate profits will likely
grow less than in recent
years, adding to pressures
on growth.
Abe has been maneuver-
ing ahead of an election
for the upper house of Ja-
pan’s parliament this sum-
mer. One possible tactic to
reassure voters and boost
support for his ruling Lib-
eral Democrats would be
to postpone, for a second
time, the tax hike meant to
help mend tattered public
finances.q
