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Japan’s main opposition leader Shinzo Abe, left, speaks in a parliamentary debate as Prime Minister Yoshihiko Noda, centre right, and members of his government look on.
Japan’s main opposition leader Shinzo Abe, left, speaks in a parliamentary debate as Prime Minister Yoshihiko Noda, centre right, and members of his government look on.
(KIM KYUNG-HOON/REUTERS)

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Japan shuns the austerity trap

Japan has avoided fiscal harakiri. The decision by the country’s opposition parties to stop blocking the government’s deficit-spending plans is a big relief for an economy that shrank by an annualized 3.5 per cent in three months through Sept. 30, and is likely to contract again in the current quarter. Exports are stumbling amid weak global demand and a boycott of Japanese-made goods in China. Amidst this, government spending worth 8 per cent of GDP was in jeopardy because of the parliamentary stalemate, according to Fitch.