Japan’s economy shrank by 1.7% (an annualised rate of 6.8%, in the second quarter of 2014), the worst fall since the global financial crisis in 2009.
This was largely due to April’s hike in Japan’s sales tax, the equivalent of VAT, from 5% to 8%. Consumers had bought more goods in the first quarter to dodge the tax, driving GDP up by a similar amount to the second quarter slide.
What the commentators said
Investors have kept an especially close eye on recent data, as a sales-tax rise in 1997 was widely blamed for triggering a [...]