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Pedestrians are silhouetted at a shopping district in Tokyo August 13, 2014. A sales tax hike last quarter drove Japan's conomy into its biggest contraction since the March 2011 earthquake and tsunami, Cabinet Office data showed on Wednesday, keeping policymakers under pressure to expand fiscal and monetary stimulus should recovery falter again.
Pedestrians are silhouetted at a shopping district in Tokyo August 13, 2014. A sales tax hike last quarter drove Japan's conomy into its biggest contraction since the March 2011 earthquake and tsunami, Cabinet Office data showed on Wednesday, keeping policymakers under pressure to expand fiscal and monetary stimulus should recovery falter again.
(YUYA SHINO/REUTERS)

New cracks in Abenomics show as Japan hit by spending drop

Japan’s economy nosedived in the second quarter as consumer spending plunged in the wake of a stiff sales tax hike, raising fresh concerns about Abenomics and increasing the chances of further government stimulus measures to keep the stumbling recovery on track.

Abenomics – Prime Minister Shinzo Abe’s mix of aggressive monetary and fiscal policies and structural reforms – is aimed at avoiding such sharp downswings, which sap confidence and raise the spectre of renewed deflation.