A recent spate of warning signs that the economy is headed for a downturn means the government of Prime Minister Shinzo Abe may need to take corrective action sooner rather than later.
Worsening conditions — and upcoming elections — could push Abe to beef up fiscal stimulus or even postpone an upcoming increase in the consumption tax, analysts say.
On Wednesday the Cabinet Office downgraded its headline assessment of the world's third-largest economy for the first time in three years. The move reflected a significant decline in exports to China and came after a key indicator of economic trends signaled that Japan may already be in a recession.