Japan falls into recession. Japan's Gross Domestic Product has fallen for the second quarter year in a row, marking a continuous downward spiraling economy that analysts say is technically a recession.
Japan's economical figures dropped as its GDP fell by 1.6%, from July to September, compared to forecast s of a 2.1% rise. The drop in the figures has been the lead reason behind the Japan falls into recession speculations.
Prime Minister Shinzo Abe, just two years into his election, is largely expected to call a snap election this December, so as to put a vote on the increasing of the sales tax. The announcement of the snap elections is largely thought to be done this Tuesday.
The increase in sales tax is scheduled to be kicked off in 2015. It will see the sales tax rise to 10%. It had previously risen to 8% from 5% in the mid year and was to hit the 10% mark by early next year. The high sales tax was largely the reason behind Japan falling into a recession.
Japan's public debt is one of the largest among developing nations. The third largest economy in the world has shown growth from the onset of Abe's economic policies that were geared towards growing Japan's global rank. The policies, popularly known as Abenomics, sought to pump billions into the country's economy through stimulus spending. This led to the sizeable reduction in value of the Japanese yen and the cheapening of the Japanese exports. The Japanese bank then went ahead to print millions in money and spent it on government bonds. The result was that more investors went to stocks, not bonds. The Japan falls into recession dominoes were knocked into motion.
The huge sales tax was imposed as a way to pay off the country's huge public debt. It had an effect of reducing purchases and private consumption, accounting for 60% of Japan's economy.
The election in December, if called will ensure the sales tax is stalled, quite naturally and possibly a closer view on the country's economy. The Japan falls into recession trend may even be reversed.
