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Slump in Japan's GDP worse than expected

7.1% Q2 GDP drop raises chances of BOJ stimulus, casts doubts on plan to increase sales tax

THE dramatic slump in Japan's gross domestic product (GDP) during the second quarter of this year was worse than the initially estimated annualised contraction of 6.8 per cent announced last month. It actually amounted to a 7.1 per cent drop, the Japanese Cabinet Office announced on Monday.

This increases the likelihood that the Bank of Japan will need to announce fresh monetary stimulus when its Policy Board meets next month, while it also reduces the likelihood of the government proceeding with a planned further hike in consumption tax next year, analysts said.

Output had been expected to plummet in the second quarter following the surge in first quarter sales in advance of the hike in the sales...

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