The contraction in Q3 GDP that was confirmed this week is likely to be followed by a rebound over coming quarters. But the bigger picture is that growth momentum has weakened since last year and, while spending to beat the coming tax hike will flatter the numbers in 2019, a substantial improvement is not likely. Meanwhile, the Abe government is currently considering how best to offset the damage that tax hike will ultimately do to demand but one of its more innovative ideas may end up stymied by the Japanese public’s reluctance to embrace digital methods of payment.
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