Japan, the world’s third-largest economy, has unexpectedly slid into recession. <br /><br />This comes after a rise in the national sales tax from five percent to eight percent resulted in reduced consumer spending.<br /><br />The tax hike was part of a plan to curb Japan’s huge public debt, the worst among advanced nations.<br /><br />Japanese Economy Minister Akira Amari said the April sales tax hike had made it harder than anticipated for the public to shake off their deflationary mindset.<br /><br />“When making a decision about tax hikes, we need to be careful not to slow down economic recovery. What’s most important is not to let it go back to deflation,” said Amari.<br /><br />Japanese media have suggested the country’s prime minister may delay a planned second rise in sales tax to ten percent, scheduled for October next year. <br /><br />Prime Minister Shinzo Abe is also expected to announce a snap election for as early as December to underpin his so-called Abenomics policies to re-energise the economy.<br /><br />A senior lawmaker argued that the prime minister’s strategy was working, but needed more time.<br /><br />However, a recent poll by Japanese public television station NHK showed support for Abe had plunged 8 percentage points in just one month.<br /><br />The benchmark Nikkei stock average posted the biggest drop since August on the surprise recession. It shed three percent to close lower on Monday.
