Japan’s economy is showing signs of shaking off almost two decades of deflation and poor growth. Now it must brace for the first hike in the country’s sales tax since 1997.
The consumption tax is set to rise to 8 percent from 5 percent on April 1 and Japan’s consumers have been front-loading their spending ahead of the hike.
For instance Japan’s domestic sales of new cars, trucks and buses increased 15 percent from a year earlier in February, rising for the sixth consecutive month.
This should provide a short-term boost for Japan, the second biggest economy in Asia after China and the third largest in the world, but economists say the real test will come later this year with the tax hike likely to take a toll on consumer spending.