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Ahead of tax hike, Japan economists split on recession fears

Declining production and weaker exports flagged as warning signs

TOKYO -- As Japanese economic data hints at a potential recession in the offing, analysts are divided on the state of the economy, weighing a strong labor market against weaker export and production numbers.

The monthly index of business conditions for January dropped to a level "signaling a possible turning point," government data released Thursday shows. But the downturn seems to reflect a manufacturing industry slowdown tied to a decline in exports, given that four of the nine indicators used to calculate the index are related to production or shipments.

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