Japan GDP plunges 7% after sales tax hike

Japan's GDP shrunk by 6.8% on an annualised basis in the second quarter following a hike in the country's sales tax.

The sales tax rise from 5% to 8% contributed to a surge in purchases in the first quarter and annualised GDP growth of 6.1%, leading to a corresponding drop in the second quarter. The 6.8% fall was actually better than expected - consensus estimates were for a 7% fall. The decline is the worst since the first quarter of 2011, when a tsunami devastated Japan's economy. However, the government was more positive, pointing to a pick-up in sales in a number of industries. "Looking at monthly data during April-June, sales of electronics goods and those at department stores are picking...