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| Japan's economy shrinks more than initial estimates | Japan's economy shrinks more than initial estimates |
| (about 5 hours later) | |
| Japan's economy contracted by 7.1% in the three months to June, more than initial estimates, and revised from 6.8% reported in August. | Japan's economy contracted by 7.1% in the three months to June, more than initial estimates, and revised from 6.8% reported in August. |
| Most forecasts were for the economy to shrink by about 7%. | Most forecasts were for the economy to shrink by about 7%. |
| The contraction during the second quarter has been widely attributed to a hike in the nation's sales tax, which rose from 5% to 8% in April. | The contraction during the second quarter has been widely attributed to a hike in the nation's sales tax, which rose from 5% to 8% in April. |
| The official gross domestic product (GDP) figure of 7.1% is an annualised number. | The official gross domestic product (GDP) figure of 7.1% is an annualised number. |
| In quarterly terms, Japan's economy, which is the world's third-largest, shrank by 1.8% in the three months to June compared to the quarter ending in March when it grew by 1.5%. | |
| 'Cautious decision' | 'Cautious decision' |
| Private consumption makes up some 60% of Japan's economic activity. | Private consumption makes up some 60% of Japan's economic activity. |
| The nation's consumers were largely seen spending more in the first quarter rather than the second, however, in an attempt to beat the sales tax hike introduced in April. | The nation's consumers were largely seen spending more in the first quarter rather than the second, however, in an attempt to beat the sales tax hike introduced in April. |
| And that activity is what economists say negatively impacted growth in the second quarter. | And that activity is what economists say negatively impacted growth in the second quarter. |
| A raft of official data released at the end of last month by Japan's government showed that households had spent less and that factory output stayed flat in July. | A raft of official data released at the end of last month by Japan's government showed that households had spent less and that factory output stayed flat in July. |
| Retail sales in July showed some small hope, rising by 0.5% from a year earlier, after a fall of 0.6% in June. | Retail sales in July showed some small hope, rising by 0.5% from a year earlier, after a fall of 0.6% in June. |
| But economists say the current economic landscape should encourage the government to introduce even more reforms. | But economists say the current economic landscape should encourage the government to introduce even more reforms. |
| At the beginning of this month, Japan's prime minister Shinzo Abe announced a government re-shuffle, which many have said signals his determination to get the economy back on track by the end of the year. | At the beginning of this month, Japan's prime minister Shinzo Abe announced a government re-shuffle, which many have said signals his determination to get the economy back on track by the end of the year. |
| Mr Abe is expected to make a decision in December about a second hike to the sales tax, which would see it move to 10% in October next year. | Mr Abe is expected to make a decision in December about a second hike to the sales tax, which would see it move to 10% in October next year. |
| Japan's economy minister Akira Amari said on Friday that the nation was ready to introduce a stimulus package that would buffer the impact of another sales tax hike if it was introduced. | Japan's economy minister Akira Amari said on Friday that the nation was ready to introduce a stimulus package that would buffer the impact of another sales tax hike if it was introduced. |
| He said the prime minister's position was "utterly neutral" on a further sales tax rise. | He said the prime minister's position was "utterly neutral" on a further sales tax rise. |
| "[Mr Abe] said no countries have doubled the sales tax rate over a year and a half," said Mr Amari. | "[Mr Abe] said no countries have doubled the sales tax rate over a year and a half," said Mr Amari. |
| "I expect that he will make a considerably cautious decision." | "I expect that he will make a considerably cautious decision." |