The latest data coming out of Japan indicates that the country’s economy has been slowing down as evidenced by the weak factory data as well as lower exports of its manufactured products. This trend was further confirmed by the Japanese finance ministry today following the release of Japan’s coincident indicator index, which fell by 0.9 in March.
The ministry declared that the country’s economy was “worsening,” which was interpreted as a downgrade for the economy given that the government was more positive about the economy in February. The latest coincident index contraction indicates that the Japanese economy could have already slid into a recession, which could get worse in Q2.
The recent developments mean that Japan’s government might have to postpone the implementation of a 2% sales tax hike that was planned as this could further derail the economy. It is not clear what the government can do to revive the economy given the decades of easy monetary policy that are yet to bear any fruit.