Taxing times for Abe

Singapore

JAPAN's surprise recession has clouded its fiscal future. Data released on Nov 17 showed the country's output has fallen for a second straight quarter. Once again, the modest 3 percentage point increase in Japan's sales tax rate in April was the culprit. The fragility of private demand not only rules out a planned second increase in the levy next year, but also reduces the chances that future politicians will bite the fiscal bullet. Taxing consumers to shrink the government's huge debt load is a fast-receding dream.

Economists had hoped for a 2.1 per cent rebound in GDP in the third quarter following the 7.3 per cent contraction between April and June. Yet this failed to materialise despite the government boosting public investment. GDP shrank by an annualised 1.6 per cent.