Japan Faces Slow Paced Economic Recovery

Published By : 02 Mar 2015 | Published By : QYRESEARCH

As per latest government data reports, Japan’s economy depicted soft consumption patterns that followed a hike in factory production. This in a way highlighted the fact that economic recovery taking place in Japan is quite uneven and it even proved to be a major bottleneck for the Bank of Japan. However, the bank anticipates that its asset purchasing aggressiveness will ensure that inflation gets driven up and even enable households to take up greater spending. 

If the impact of the earlier year’s tax hike is not taken into account, the core CPI (Consumer Price Index) which did not include the fluctuating oil costs and food prices would rise by a mere 0.2% during the month of January as against the same month the year previous to that, which was quite below expectations and which slowed from 0.5% in the month of December. Furthermore, in the month of January, several households in Japan had reduced spending greater than expectations and the retail sales declined in 7 months for the very first time. 

Household spending came down by 5.1% which exceeded business expectations; this was in comparison to the same situation that took place during the same time the year earlier. This happened at a time when spending has been declining for the tenth following month, and this was by far the longest declining trend right from the time of the 2009 global financial slowdown. The retail sales came down way below expectations – 2%!!

As per an income strategist, if by chance consumer spending does not increase by the month of April; industrial production will not be able to catch up as desired. The dull consumer mood has been keeping a hold on spending since wages still have to rise so that it makes up with the increase in sales tax. 
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