Evidence of Japan Growth Constraints

Japan’s exports grew at a slower-than-forecast pace while imports swelled in July, highlighting limits on the economy’s growth that could fuel opposition to a planned sales-tax increase.

Exports rose 12.2 percent from a year earlier, the Ministry of Finance said in Tokyo today, compared with the 12.8 percent median estimate of 23 economists surveyed by Bloomberg News. Imports climbed 19.6 percent, leaving a trade deficit of 1.024 trillion yen ($10.5 billion). The seasonally adjusted deficit expanded from June to 944.0 billion yen.

Prime Minister Shinzo Abe is set to decide in the next month whether to raise the sales tax to 8 percent in April from 5 percent now and will listen to opinions of a panel of experts to consider the impact on the economy. Increasing the tax would risk choking off a recovery helped by stronger exports, just as Japan shows signs of emerging from 15 years of deflation.


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