https://www.wsj.com/articles/land-of-the-rising-unease-11554333457
Japan is joining much of the world in facing weaker economic growth, but in one respect it’s unique. Prime Minister Shinzo Abe seems determined to make it worse by imposing a tax increase later this year.
This week’s survey of business confidence from the Bank of Japan makes for bracing reading. Confidence among large manufacturers fell to 12 from 19 in December, the steepest decline since 2013. Smaller manufacturers shared the gloom. This follows anemic retail sales and weak growth in industrial production in February after several months of contraction. The economy eked out GDP growth of 0.8% in 2018 and may struggle to match that this year.
Foreign pressures aren’t helping Japan, including President Trump’s trade war with China, which has Asian economies caught in the crossfire. Japan’s export-dependent economy remains vulnerable to slower growth in Europe and China.
Yet domestic problems are also in play. Mr. Abe’s economic revival program, Abenomics, still hasn’t fully launched as it enters its eighth year. He delivered more government spending and an unprecedented monetary blowout, but the policy reforms intended as the “third arrow” of the plan never took flight. This is weighing on investment and productivity growth.