S&P on Japan: A sales tax hike next year could cause several quarters of weak growth

Analysts at S&P believe the delay in Japan’s sales tax hike plan looks appropriate given the uncertainties surrounding the Japanese economic outlook.

Key Points:

Significant risk that a sales tax hike next year could cause several quarters of weak growth

Sales tax hike as planned may not generate revenue needed for Japan to meet budget surplus target

Japan's economy not supportive of higher taxes, there is risk of return to deflation

Do not expect delay to signal Japan's loss of commitment to deficit reduction