Prime Minister Shinzo Abe is widely expected to call a snap election to seek a mandate to delay an increase in the sales tax to 10%, scheduled for 2015.<\/p>\n
The tax increase was legislated by the previous government in 2012 to curb Japan’s huge public debt, which is the highest among developed nations.<\/p>\n
April saw the first phase of the sales tax increase, from 5% to 8%, which hit growth in the second quarter and still appears to be having an impact on the economy.<\/p>\n
The economy shrank 0.4% in the third quarter from the quarter previous.<\/p>\n
The data also showed that growth in private consumption, which accounts for about 60% of the economy, was much weaker than expected.<\/p>\n
![\"Japan's](\"http:\/\/news.bbcimg.co.uk\/media\/images\/79072000\/gif\/_79072590_japan_economy624.gif\")
<\/div>\nThe next tax rise had already been put in question by already weak economic indicators.<\/p>\n
“The Japanese economy is in recession and has now contracted in three of the last four quarters,” said Glenn Levine, senior economist at Moody’s Analytics.<\/p>\n
“The most likely course is now a snap election in December in which voters choose, naturally enough, to delay the tax increase.”<\/p>\n
Election expected<\/span><\/p>\n Speculation had been growing that the Japanese prime minister would call an election next month to gain support just two years after his election.<\/p>\n Local media are now reporting that Mr Abe could announce the next election as early as Tuesday to be held on 14 December.<\/p>\n The Japanese government’s chief spokesperson Yoshihide Suga said on Monday that Mr Abe was expected to decide on various steps to take amid the “severe economic situation”.<\/p>\n While Mr Abe’s popularity has fallen since he took office in 2012, he is expected to win if an election were called, because the opposition remains divided.<\/p>\n In reaction to the negative economic data, the dollar went above 117 Japanese yen before settling back at 115.69.<\/p>\n The benchmark Nikkei 225 index, meanwhile, closed down almost 3% to 16,973.80, marking its biggest one-day drop since August.<\/p>\n <\/p>\n Source: BBC<\/p>\n","protected":false},"excerpt":{"rendered":" Japan’s economy unexpectedly shrank for the second consecutive quarter, leaving the world’s third largest economy in technical recession. Gross domestic product (GDP) fell at an annualised 1.6% from July to September, compared with forecasts of a 2.1% rise. That followed a revised 7.3% contraction in the second quarter, which was the biggest fall since the […]<\/p>\n","protected":false},"author":5,"featured_media":65775,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[14],"yoast_head":"\n![\"Abe\"](\"http:\/\/news.bbcimg.co.uk\/media\/images\/79065000\/jpg\/_79065048_024488683-1.jpg\")
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