Uncertainties are deepening about the course of the economy ahead of the consumption tax hike in April. The recovery driven by the large fiscal stimulus and aggressive monetary easing since Prime Minister Shinzo Abe took office in December 2012 appears to be losing steam.
Abe needs to flesh out the "third arrow" of his economic revival strategy so that the uptrend can survive the expected dip following the first consumption tax hike in 17 years.
Growth of Japan's gross domestic product for the October-December period has been revised downward to an annualized 0.7 percent on a lower rise in capital investments and consumer spending. GDP growth is decelerating and the government's target of 2.6 percent growth for fiscal 2013, ending March 31, will be hard to achieve even though consumer spending is believed to have risen in the current quarter as people rush to shop before the three-percentage-point tax hike.