The impact of a hike in consumption tax on Japan’s economy hasn’t been as bad as feared, says the country’s central bank chief, who predicts the effects to be contained and economic recovery to resume in the third quarter.
Japan raised its sales tax last month to 8 percent from 5 percent in a bid to bring down its hefty debt pile -the country has the world’s largest debt-to-gross domestic product (GDP) ratio, at over two-to-one – but the decision has been panned by critics who warn that the move could derail the economy’s nascent recovery.
Bank of Japan (BOJ) governor Haruhiko Kuroda notes that while consumption has fallen dramatically since the tax hike, he remains optimistic Japan’s economy can shake off the ill-effects.
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