One of the world's most pivotal economies is reeling from a self-induced policy mistake. Japan is now paying the price for last quarter's consumption-tax hike, just as it begins to wrestle with the impact of the coronavirus.
Japan's gross domestic product tanked 6.3 percent in the final three months of 2019, the Cabinet Office said Monday, almost twice the drop economists anticipated and the worst result in five years. There's a good chance Japan will fall into recession, given how much the virus has already curtailed activity this year.
This fiasco was all so unnecessary. There's never a good time to raise taxes, and Japan's aging population is straining its fiscal base. That said, Prime Minister Shinzo Abe was warned in the months leading up to the Oct. 1 hike that the economy would take a hit. (I wrote a year ago about the folly of going forward.) The increase to 10 percent from 8 percent had already been delayed twice.