AFP, Tokyo :
Japanese factory output contracted in February, data showed Monday, a surprise decline that highlighted the uneven economic recovery in the world’s number three economy as consumers brace for a sales tax hike.
The 2.3 percent fall in output from January-the first decline in three months-is likely to aggravate concerns about the potential impact of the increased levy, which takes effect on Tuesday.
There are fears that the tax rise to 8.0 percent from 5.0 percent-seen as crucial to paying down Japan’s huge national debt-will weigh on consumer spending and derail a budding recovery.
The last time Japan brought in a higher levy in 1997, it was followed by years of deflation and tepid economic growth.
Prime Minister Shinzo Abe faces a tricky balancing act as he tries to nudge the economy out of a cycle of falling prices and lacklustre growth with a growth blitz dubbed Abenomics.
