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Japan's GDP shrinks by 6.8% after sales tax rise

The shrinkage was largely in response to a government sales tax, which held back consumer spending

August 13, 2014 10:04 IST | India Infoline News Service
Japan's gross domestic product (GDP) shrunk by an annualized 6.8% in the three months ended June, Japan's Cabinet Office said Wednesday.
On a quarterly basis, Japan's GDP dropped by 1.7% in the second quarter after a 1.5% rise in the first three months.
The shrinkage was largely in response to a government sales tax, which held back consumer spending. Japan's sales tax rose from 5% to 8% in April.
Private consumption, which comprises 60% of the Japan's economic activity, was 5% down on the previous quarter.
The economy grew at an annualised rate of 6.1% in the first quarter of this year.
In a statement issued after the GDP release, Economics Minister Akira Amari said: "Looking at monthly data during April-June, sales of electronics goods and those at department stores are picking up after falling sharply in April.
"The job market is also improving steadily. Taking these into account, Japan's economy continues to recover moderately as a trend and the effect of the sales tax hike is subsiding."

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