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Japan shuns the austerity trap Add to ...

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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.

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