The economy shrank at an annual pace of 6.3% in the fourth quarter of 2019
ECONOMISTS STILL puzzle over Abenomics, the experimental mix of policies introduced by Japan’s prime minister, Abe Shinzo, seven years ago, in an effort to ward off the country’s deflation and stagnation. But two lessons are clear. Japan’s bond market is remarkably docile. And its households are painfully sensitive to increases in the consumption tax, a broad value-added tax imposed on many of their purchases.
The error was foreseeable as well as unforced. A rise in the same tax in April 2014 was followed by a similarly dramatic contraction in the economy, undermining the early momentum of Mr Abe’s reflationary push. The government had hoped to avoid a repeat of that experience by adding various offsetting measures, including free education for pre-school children and a “rewards” system for customers who paid cashlessly.
Faced with these fiscal, natural and viral setbacks, what will the BoJ do? Since 2016, when it cut the interest rate on some bank reserves to -0.1% and pegged longer-term yields to zero, it has seemed largely out of ideas. Inflation has persistently undershot its target, which would call for easier monetary policy. But its negative interest rates are already unpopular with banks, insurance companies and savers.
Malaysia Latest News, Malaysia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Barclays the latest bank to lower Brazil GDP forecastsEconomists at Barclays have cut their Brazilian growth forecasts, the latest in ...
Read more »
Thai fourth-quarter GDP expands 1.6% year-on-year, slowest pace in five yearsThailand's trade-dependent economy grew at its slowest pace in five years i...
Read more »
Euro near three-year low on sluggish growth, yen steady despite weak GDPThe euro was on the back foot on Monday, as concerns mounted about weakening eco...
Read more »
Japan’s Third Sales-Tax Blunder Must Be Its Final MistakeHousehold consumption shrank rapidly as Japan’s sales-tax increase went into effect. The logic of repeated fiscal tightening looks shakier than ever.
Read more »
Japan's recession risks grow as economy skids in fourth quarter, virus clouds outlookJapan's economy shrank at the fastest pace in almost six years in the Decem...
Read more »
Japan on brink of recession as economy contracts, virus heightens riskJapan’s economy shrank at the fastest pace in almost six years in the December quarter as a sales tax hike hit consumer and business spending, raising the risk of a recession as the coronavirus outbreak chills global activity. More here:
Read more »