Japan in recession as economy contracts 1.6 pct

Japan reported Monday that its economy contracted at a real annual rate of 1.6 percent in July-September, in a second straight quarterly decline that returned the country to recession.

A 24.1 percent plunge in private residential investment from a year earlier failed to offset a modest recovery in exports and a 1.5 percent increase in household spending.

Most economists had forecast that the world’s third-biggest economy would expand at about a 2 percent pace. The negative growth figure was much lower than expected and makes it very likely Prime Minister Shinzo Abe will delay implementation of a sales tax hike planned for October, 2015. …

We are going to find out whether deflation is harmful to the world economy. All the Kenynesian state it is.

Thing is, the fiat has inflated for over 50 yrs now. It can't inflate indefinitely, I don't believe.

Very disappointing news, and against predictions.

Unfortunately, it was not only entirely predictable, but virtually certain, due to drastic, though well advertised in advance, sales tax increase from 5% to 8% in April, and the prospect of another increase to 10% next year (now virtually guaranteed to be rescinded or delayed) — contrary to analysis by most economists and financial "experts" who were probably too drunk watching Nikkei 225 rising to hit seven-year high.

Unfortually, what Abe and Aso are doing to fight the three decades-long cycles of deflation and recessions is nearly classic Keynesian "solution" to the government-created in the first place Keynesian problem - more debt-accruing fiscal and monetary stimulus from the government, and austerity regime for the people (quite similar to what's going on in the most of EU countries).

Sharp broad tax increase with a (finally) a whiff of low inflation combined with the stagnant wages had a very predictable effect on the economy. Abenomics needs adjustment, hayai (車い) .

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.