Date
17 August 2017
A higher sales tax aimed at curbing the world's largest debt pile, weighed on Japan's economy in the June quarter, with growth slowing the most since the 2011 earthquake and tsunami. Photo: Bloomberg
A higher sales tax aimed at curbing the world's largest debt pile, weighed on Japan's economy in the June quarter, with growth slowing the most since the 2011 earthquake and tsunami. Photo: Bloomberg

Japan economy worst since 2011 quake

Japan’s economy shrank the most since the devastating 2011 earthquake and tsunami, dragged by increased sales taxes aimed at easng the world’s biggest debt burden, Bloomberg reported Wednesday.

Gross domestic product (GDP) fell an annualized 6.8 percent in the three months to June, less than the median estimated fall of 7 percent by 37 economists in a Bloomberg survey.

GDP slipped 0.4 percent without adjusting for price changes.

Output fell in June, the most since March 2011, as companies tried to pare mounting inventories.

The contraction followed a surge in growth in the three months to March when consumers and companies rushed to make purchases before an increase in the sales tax.

The yen was little changed at 102.29 against the US dollar.

Household consumption tumbled at an annualized pace of 19.2 percent from the previous quarter while private investment sank 9.7 percent, highlighting the damage to demand by the 3 percentage point increase in the levy.

The higher sales tax hit consumers who have seen little growth in incomes and rising costs of living after the Bank of Japan stoked inflation with unprecedented easing.

Consumer prices rose 3.6 percent in June from a year earlier — nine times the increase in total cash earnings — with food prices climbing 5.1 percent.

Japan is grappling with sovereign debt equivalent to 240 percent of GDP.   

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