Japan Consumption Tax hike helps sink economy
- Feb 18, 2020 | Richard Asquith
Japan’s increase in its Consumption Tax rate from 8% to 10% on 1 October 2019 is set to tip the country into recession.
Quarter 4 growth for 2019 has been reported as negative 6.3%. This compared to expected targets of negative 3.7%. With the effects of the coronavirus outbreak showing signs of hitting Quarter 1 2020 economic performance. This would mean a likely technical recession - defined as two successive quarters of negative growth - for the country.
When Japan raised its Consumption Tax rate from 5% to 8% in 2014, the country fell into recession as shoppers brought forward expenditure. The scheduled rise to 10% had to be postponed twice until 2019 for fears of triggering another recession.
The Japanese government had launched a range of support measures in 2019 to prevent a recession this time around, included shopping vouchers for the poorest. But this now seems to have had little effect.