Japan’s industrial production fell in February, undershooting all forecasts by economists surveyed by Bloomberg News, as the first sales-tax increase since 1997 risks stalling recovery in the world’s third-biggest economy.
Japanese companies eased off on capital-spending growth in the third quarter and failed to step up exports even with a cheaper yen, contributing to an economic slowdown that puts pressure on Prime Minister Shinzo Abe.
Japanese Prime Minister Naoto Kan may have to raise taxes by as much as 7 trillion yen ($76 billion) to fulfill his pledge to cap bond sales in coming years, according to an independent adviser to the government.
Japan’s consumer prices rose 0.2 percent in April from a year earlier, the third monthly increase, showing the Bank of Japan remains distant from a 1 percent inflation target after years of falling prices.
Japan is suffering its worst year for exports since the global contraction in 2009 as Europe’s crisis, China’s slowdown and a diplomatic dispute with the Chinese hurt manufacturers and deepen the risk of a recession.