ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon Print

Japan's ill-timed sales tax increase is already backfiring

Monetary easing is again on the cards as economy slows down

| Japan
A man chooses goods underneath banners notifying the rise in sales tax at a store in Tokyo on Sep. 25: many worried the boost would hit spending.   © Reuters

There is never a good time for self-inflicted economic wounds. But the results of one Japan administered to itself 10 days ago are already in -- and they should worry global markets.

On October 1, Prime Minister Shinzo Abe's government tried to prove its mettle by raising sales taxes from 8% to 10%. Many worried the boost would hit spending, just as the boost from 5% to 8% did in 2014. The last thing an economy still grappling with deflationary forces needs is tighter fiscal policy during a global trade war.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

Discover the all new Nikkei Asia app

  • Take your reading anywhere with offline reading functions
  • Never miss a story with breaking news alerts
  • Customize your reading experience

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more