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Yoshihide Suga has been elected by Japan’s parliament as the country’s new prime minister, following the surprise resignation of Shinzo Abe.

After winning the leadership of the governing party earlier this week, today’s vote confirms the former chief cabinet secretary’s new position.

A close ally of Shinzo Abe, Yoshihide Suga is expected to continue his predecessor’s policies.

Shinzo Abe announced his resignation last month citing health issues.

On September 16, Shinzo Abe held his final cabinet meeting and told reporters he was proud of his achievements during his nearly eight years in power.

Yoshihide Suga then easily won a poll for prime minister in the Diet, Japan’s lower house, receiving 314 out of 462 votes.

Given that a coalition headed by his conservative Liberal Democratic Party (LDP) holds the majority in the house, Yoshihide Suga’s win was widely expected.

Along with his new cabinet Suga will later be ceremonially endorsed by the emperor at the Imperial Palace.

Japan: PM Shinzo Abe Resigns for Health Reasons

A veteran politician and long-time cabinet member, Yoshihide Suga takes the lead at a difficult time for the world’s third-largest economy.

Like many other nations, Japan is struggling with the coronavirus pandemic which has caused the biggest economic slump on record following years of economic stagnations.

Japan is also dealing with a rapidly ageing society, with nearly a third of the population older than 65.

Yoshihide Suga, 71, has served for years as chief cabinet secretary, the most senior role in government after the prime minister.

He has already promised to carry on much of the previous administration’s agenda, including the economic reform program dubbed Abenomics.

Born the son of strawberry farmers, Yoshihide Suga comes from a humble background that sets him apart from much of Japan’s political elite.

He only slowly within the political ranks. He first worked as a secretary for an LDP lawmaker before eventually embarking on his own political career, from city council elections to becoming a member of the Diet in 1996.

In 2005 he became a cabinet minister under Junichiro Koizumi and gained further influence in the subsequent Abe cabinet.

As Shinzo Abe’s right-hand man, Yoshihide Suga gained a reputation for being efficient and practical and the outgoing prime minister strongly supported his ally’s bid for the leadership.

Japan’s economy grew at its fastest pace for more than two years in Q2 as consumer spending and capital expenditure ramped up.

GDP expanded at an annualized rate of 4% in the April-to-June period, government data showed, beating expectations for a 2.5% rise.

The world’s third-largest economy grew 1% compared to the previous quarter.

Japan is enjoying its longest economic expansion in a decade, buoyed by spending and investment.

The country’s economy has been gaining strength thanks to rising exports, including smart phones and memory chips.

Investment tied to the Tokyo 2020 Olympics has also given the country’s economy a boost in recent months.

Image source Wikimedia

Japan economy enters contraction starting with Q3 2012

Japan’s Economy Shrinks 0.4% in Q4 of 2015

Japan’s economy slips into recession

Strong domestic demand helped to offset a drop in exports during Q2.

Japan has been trying to lift consumer spending, which accounts for more than a half of the country’s GDP.

The latest figures could be a help to PM Shinzo Abe who pledged to reignite growth and spending through his Abenomics reforms.

Shinzo Abe has seen his popularity sink recently over a series of scandals including claims he exploited his political power to help a friend.

Japan has battled years of deflation, or falling prices, and slow growth following an equity and property market bubble in the early 1990s.

The Abenomics program, a mix of monetary easing, government spending and structural reforms, was designed to reignite the once-booming economy and lift consumer prices.

Falling prices can discourage spending by consumers, who might put off purchases in the hopes that prices will drop further.

That hurts businesses, as it can stop companies from increasing production, hiring new staff or increasing wages.

Japan stock market has started the week with sharp falls, as a surge in the yen hurt shares in big exporting companies.

The Nikkei 225 index ended 3.1% lower at 16,174 – higher than its low point for the trading session, but still the lowest close since April 12.

Photo Wikipedia

Photo Wikipedia

Toyota shares closed down 3.8%, Nissan Motor dropped 5% and Honda Motor shed 4%.

The yen shot up after the Bank of Japan (BOJ) decided not to launch fresh economic stimulus last week.

On April 29, the yen was at about 108 yen against the dollar. It strengthened a little on May 2 to around 106.31 yen.

In South Korea the Kospi ended May 2 session lower, by 0.8% at 1,978.15 points. And that is also a three-week low.

Markets in China and Hong Kong are shut on May 2 for the Labor Day holiday.

Japan stock market traded low as the yen surged after the Bank of Japan decided against any extra monetary easing.

The Bank of Japan (BoJ) kept interest rates unchanged despite coming under pressure to take further action.

The central bank had introduced negative rates in January but this failed to provide a much needed boost for the economy.Bank of Japan QE decision 2015

The Nikkei 225 index finished 3.6% lower at 16,666.05. New economic data also showed a slip back into deflation while industrial production expanded.

Japan has for years been trying to boost its economy and end a period of stifling deflation.

One way to try to achieve this is by monetary policy, which is one of PM Shinzo Abe’s three key “Abenomics” policies to turn around the economy.

However, even negative rates – meaning commercial banks will be charged if they deposit money with the central bank – have not trickled down to get banks to lend more and companies and people to invest or spend more.

Inflation is still far off the 2% target.

The BoJ’s decision to hold rates also sent the yen currency soaring, which is likely to have a negative effect on the crucial export sector.

The yen rose nearly 2% against the dollar, with one dollar worth 109.33 yen.

Japan stock market has recovered on March 28 helped in part by a lower yen against the dollar.

Nikkei 225 index finished up 0.77% to 17,134.37.

Shares in troubled Japanese electronics giant Sharp rose as much as 8% in early trade on hopes of a bailout deal.Tokyo stock market 2016

The Nikkei business daily newspaper reported that a deal for Sharp may finally be signed this week.

Sharp has been in talks with Taiwan’s Foxconn, formally known as Hon Hai Precision Industry Co.

However, the deal will be smaller than originally planned, reports said.

Sharp’s shares finished the Easter Monday session up almost 5%.

In China, the Shanghai Composite spent much of the day in positive territory.

Data released on the weekend showed industrial profits returned to growth during January and February, which gave a boost to manufacturing shares.

However, by late afternoon, the index had lost ground and was down 0.33% to 2,968.9.

South Korea’s benchmark Kospi index finished the session flat at 1,982.54.

Markets in Hong Kong and Australia reopen on March 29 after the Easter holidays.

The Japanese economy contracted by 0.4% in Q4 of 2015 compared with the previous quarter, official figures show.

Expectations for the numbers were for a quarterly contraction of 0.3%.

Weaker domestic demand, together with slower investment in housing, contributed to the disappointing numbers.

On an annualized basis, Japan’s economy contracted 1.4% during the period. That compares with expectations for an annualized contraction of 1.2%.

The annualized figure is the rate at which the economy would have contracted over a full 12 months had the December quarter been a reflection of the entire year.Japan economy Q4 2015

PM Shinzo Abe’s plan to revive the economy – dubbed Abenomics – was introduced after his December 2013 election win.

Its aim was to combat deflation, which Japan has struggled with for nearly two decades, as well as boost demand and investment. It also wanted to weaken the yen, so helping big exporters like Toyota become more competitive.

However, growth has remained a concern. Analysts say Japan needs to ensure exports grow in order to support future economic growth – for every 1% that Japan’s economy grows, between 0.5 and 0.7% comes from exports.

Japan also relies heavily on domestic consumption but its population is ageing and shrinking so fewer people are contributing to the economy.

In Q3 of 2015, according to revised numbers, Japan avoided a technical recession. It has already been in recession four times since the global financial crisis.

Some analysts said February 15 numbers should be viewed in context.

“A single negative growth number should not be over-interpreted because the economy remains in rather good shape and continues to get strong policy support,” said economist Martin Schulz.

Investors seemed to shrug off February 15 growth numbers, with the benchmark Nikkei 225 jumping more than 4% shortly after the figures were released.

However, the benchmark shed more than 11% last week, which was a short trading week due to a public holiday on February 11.

Japan’s big exporters were particularly hard hit as a stronger yen against the dollar hurt investor sentiment.

The Bank of Japan (BoJ) has adopted a negative interest rate in a surprise move.

The benchmark rate of (-0.1%) means that commercial banks will be charged by the central bank for some deposits.

The BoJ hopes this will be a disincentive to banks to save and prompt them to lend in another attempt to counter the continuing economic slump in the world’s third-largest economy.

The eurozone also has negative interest rates, but this is a first for Japan.

It is a move that has been on the cards for Japan’s stagnating economy for well over 10 years.

The decision to go negative came after a narrow 5-4 vote at the Bank of Japan’s first meeting of the year on January 29.Bank of Japan negative interest rate

“The BoJ will cut interest rates further into negative territory if judged as necessary,” the Bank of Japan said, adding it would continue as long as needed to achieve an inflation target of 2%.

Some analysts have cast doubt over how effective the rate cut will be.

In a press conference, the BoJ’s governor Haruhiko Kuroda said the weakening growth rate of the global economy was the main factor behind the move: “Japan’s economy continues to recover moderately and the underlying price trend is improving steadily… further falls in oil prices, uncertainty over emerging economies, including China, and global market instability could hurt business confidence and delay the eradication of people’s deflationary mindset.”

Earlier in the day, fresh economic data had again highlighted concerns over economic growth. The December core inflation rate was shown to be at 0.1% – far below the central bank’s target.

Asian shares jumped and the yen fell across the board in reaction to the announcement. Japanese banks though saw their shares drop on the news as lenders are likely to see their margins squeezed even more.

The decision comes in addition to the BoJ’s massive asset-buying program, which over the past years has failed to boost growth.

Japan’s Economy Minister Akira Amari has announced he is resigning amid corruption allegations.

Akira Amari unexpectedly made the announcement at a press conference in Tokyo on January 28.

He again denied personally receiving bribes from a construction company, as had been alleged by a Japanese magazine.

The development will be seen as a significant blow for PM Shinzo Abe.

Akira Amari, who has been minister of state for economic and fiscal policy since late 2012, has been widely described as one of Shinzo Abe’s most trusted members of parliament.

As Japan’s lead negotiator for the Trans Pacific Partnership (TPP) agreement, Akira Amari was expected to travel to New Zealand next week to sign the agreement.

Photo Reuters

Photo Reuters

He was also regarded as the architect of Abenomics – Shinzo Abe’s plan to pull the world’s third largest economy out of deflation.

Akira Amari will be replaced by Nobuteru Ishihara, formerly the country’s environment minister.

A local magazine had reported last week that Akira Amari and his aides were given money and gifts worth some 12 million yen ($101,000) by a construction company in return for some favors linked to land ownership.

Akira Amari said he did receive money which he wanted declared as a political donation, however, he said some of it was mishandled by his staff.

Japan’s economy, which has been struggling with deflation for nearly two decades, avoided a technical recession in Q3 of 2015.

“Japan is finally emerging from deflation,” Akira Amari told the press conference, as reported by Reuters.

“We need to pass legislation through parliament for steps to beat deflation and create a strong economy as soon as possible.

“Anything that hampers this must be eliminated, and I’m no exception,” Reuters reported him as saying.

“I, therefore, would like to resign as minister to take responsibility [for what my aide has done],” he said, according to Reuters.

Akira Amari is the fourth member of Shinzo Abe’s cabinet to resign amid allegations of bribery, among other issues.

Pm Shinzo Abe has apologized for the latest resignation.

Japan’s economy has shrunk 0.8% on an annualized basis in Q3 of 2015 and fell back into recession.

The preliminary data means the world’s third-largest economy has contracted for a second consecutive quarter, marking a technical recession.

Japan’s economic growth was expected to decline after it fell a revised 0.7% in Q2 on weak domestic demand.

The country has been in recession four times since the global financial crisis.

Photo EPA

Photo EPA

On a quarterly basis, growth fell 0.2% in the third quarter from the previous one, weaker than forecasts of a 0.1% decline.

The seasonally adjusted figure was also much lower than expectations of a 0.2% drop.

According to economists, the weak data will put more pressure on the government and central bank to continue to stimulate the economy.

Japanese companies continue to be wary of using their record profits to raise wages and invest in the economy – a major challenge for Prime Minister’s Shinzo Abe’s “Abenomics” policies.

Business spending fell 1.3%, against forecasts of a 0.4% decrease. It also marked the second quarter in a row of declines.

However, private consumption, which accounts for 60% of the economy rose 0.5% from the previous quarter.

Consumer spending has picked up from the hit it took last year from an increase in sales tax in April, which contributed to the recession in 2014.

Despite the declining growth, the government is positive that a recovery is underway.

In reaction to the growth figures, the benchmark Nikkei 225 index was down 1.1% to 19,372.98 points in early trade in Tokyo.

Asian markets traded higher on September 30, recovering from the previous session’s steep losses, despite disappointing economic news from Japan.

The Japanese index, Nikkei 225, led the region’s gains, closing up 2.7% at 17,388.15, after losing more than 4% on September 29.

Investors ignored data that showed Japanese factory output shrank by 0.5% in August from July, and retail sales also fell short of expectations.

Investors are awaiting the Bank of Japan’s business confidence survey.

Bank of Japan’s quarterly Tankan survey due on October 1 is expected to show that business sentiment worsened in the three months to September.

Shares in Japan Tobacco fell 6.7% on concerns that it has paid too much to buy the rights for Reynolds American’s Natural American Spirit tobacco brand outside the US for 600 billion yen ($5 billion).Asian markets trade higher

Chinese shares headed higher as investors took in news of a new tax cut on some car sales.

A government announcement on September 29 said the sales tax on cars with smaller engines would be halved. The cut will be effective from October 1, 2015, until the end of 2016.

China is the world’s biggest market for cars and the new tax cut will apply to about 70% of the market.

Hong Kong’s Hang Seng index closed up 1.14% at 20,851.32, while the Shanghai Composite closed up 0.48% at 3,052.78.

Australia’s benchmark S&P/ASX 200 index closed up 2.1% at 5,021.60 after hitting a two-year low on Tuesday.

Meanwhile, South Korea’s Kopsi index ended up 1% to 1,962.91 as it reopened following public holidays.

Japan’s core consumer price index (CPI), fell on an annual basis for the first time in over two years in August.

The CPI, which includes oil but not fresh food prices, declined 0.1% from a year ago – the first drop since April 2013.

The headline consumer price index rose 0.2% from a year ago, but remained flat from the previous month.

Photo Reuters

Photo Reuters

Deflation fears have plagued Japan, putting pressure on policymakers.

PM Shinzo Abe and Bank of Japan have pledged to get the economy out of the deflation it has been battling for years.

Even though the fall in prices in August was expected, economists said the latest reading would result in Japan’s central bank stepping up its pace of easing in October.

Japanese Economics Minister Akira Amari told the media on September 25 that it was up Bank of Japan to take appropriate steps on monetary policy after the data came out.

Japan’s stock market fell on September 18 as the yen strengthened against the dollar in the wake of the Federal Reserve’s decision not to raise interest rates.

The Nikkei 225 index closed down 2% at 18,070.21. The dollar fell against the yen following the Fed’s decision to keep its interest rates unchanged, which hit shares in Japanese exporters.

Shares in Toyota and Honda dropped 1.4%, while Panasonic was 2.1% lower.

A stronger yen against the dollar affects exporters, as it makes their goods more expensive to sell overseas.

The Fed’s decision to hold interest rates also renewed concerns about the strength of the global economy.

Photo WSJ

Photo WSJ

The US central bank said worries over the global economy, particularly China, had influenced its decision not to raise rates.

US shares saw choppy trade after the decision, with both the Dow Jones and S&P 500 closing lower.

Chinese shares were mixed after government data showed that property prices had shown some signs of recovery.

New home prices rose for a fourth consecutive month in August, up 0.3% from the previous month, but were down 2.3% from a year ago.

The property sector accounts for 15% of China’s economic growth, so even minimal gains have a positive impact on the world’s second largest economy.

The Shanghai Composite index ended 0.4% higher at 3,097.92, while Hong Kong’s Hang Seng index closed up 0.3% at 21,920.83.

In Australia, the S&P/ASX 200 index erased earlier losses to end up 0.6% at 5,178.50.

South Korea’s benchmark Kospi index finished 1% higher at 1,995.95.


State-owned Japan Post is seeking to raise as much as 1.39 trillion yen ($11.5 billion) in a stock market listing that would be one of the world’s biggest this year.

The plan for the Japanese giant corporation would be one of the country’s largest public share sales in more than 30 years.

The share sale is aimed at boosting Japan’s economy and stock markets.

Japan’s economy shrank in Q2 2015 – a setback for the government’s reform policy.

“We are hopeful it will lead to a virtuous economic cycle,” a senior government official said.Japan Post listing 2015

Chief cabinet secretary Yoshihide Suga said the share offering would encourage a shift of savings out of bank deposits and into the stock market.

Earlier this month, Japan said its economy contracted by 0.3% in the three months to June, compared with original calculations of a 0.4% contraction.

The revision beat market expectations, which were for a contraction of 0.5%, but analysts said it had not eased concerns about the state of the economy.

Lagging exports and sluggish consumer spending were the biggest contributors to the drop in growth. Consumer spending makes up some 60% of Japan’s economy.

About 80% of the shares in Japan Post Holdings would go to domestic investors, reports said.

Japan Post is headed up by Toru Takahashi, employs some 195,000 people, and has 24,000 post offices.

The giant corporation also controls the country’s largest bank, Japan Post Bank, and Japan Post Insurance, the biggest insurer.

In February, Japan Post announced a $5.1 billion offer for Australia’s Toll Holdings, the largest transport and logistics company in the Asia-Pacific region.

The deal, which went through for $4.6 billion in May, has helped Japan Post become a leading global logistics player.

The Japan Post triple market debut, including its bank and insurance arms, is expected to occur in early November.

Asian stock markets were mostly lower on September 10 as economic data from Japan and China made investors cautious.

After surging almost 8% on September 9, Japan’s Nikkei 225 index closed down 2.5% at 18,299.62, among Asia’s big losers.

Worries about a slowdown China and the impact of a US interest rate hike also dented investors’ confidence.

Analysts said losses were to be expected considering Wednesday’s significant gains – particularly in Japan.

Core machinery orders in Japan, which are a key indicator of capital expenditure, fell by 3.6% in July compared with June.

The renewed decline suggested that business investment may fall yet again this quarter, economists said.

In Australia, the S&P/ASX 200 closed down 2.4% at 5,098.40, following Wall Street lower and after two sessions of gains.

Photo AsiaNews

Photo AsiaNews

The Australian dollar fell together with the New Zealand dollar on Thursday after New Zealand’s central bank cut interest rates to 2.75% and said it may introduce further easing measures to boost its flagging economy.

In China, the benchmark Shanghai Composite ended down 1.4% to 3,197.89, while Hong Kong’s Hang Seng lost 2.6% to 21,562.5 points.

Official figures released on September 10 showed China’s consumer price index (CPI) unexpectedly rose to 2% in August from a year ago marking a one-year high.

The rise was due to higher food prices. Pork prices, which weigh heavily on consumer prices in China, rose from 16.7% last year to 19.6% in August.

China’s producer price index (PPI) fell 5.9% – marking its 42nd consecutive month of declines – and the biggest drop since 2009.

The one bright spot in Asia was South Korea’s Kospi which closed up 0.7% to 1,947.30 points.

Japan’s stock market closes up almost 8% on September 9 in its biggest one-day jump since late 2008.

Nikkei 225 index closed up 7.71% at 18,770.51 points.

On September 8, the benchmark index saw all the gains it had made this year wiped out.

Remarks by newly re-elected PM Shinzo Abe suggesting company tax cuts were on the way helped the mood.

Also positive were September 8 rebound for US shares and an improving Chinese share market.

Investor sentiment was up across the rest of Asia.Japan stock market up September 2015

Tuesday’s weak economic data from China has also raised hopes of more stimulus for that economy and its markets.

Hong Kong’s benchmark Hang Seng index finished up 4.1% at 22,131.31 – marking its biggest one-day percentage gain in almost four years.

China’s government said on September 9 that it would strengthen fiscal policy, boost infrastructure spending and speed up reform of its tax system to support the economy.

On the mainland, the Shanghai Composite closed up 2.3% at 3,243.09 – moving into positive territory for the year.

In Australia, the S&P/ASX 200 closed up 2.07% at 5,221.10, taking its lead from US markets.

Analysts said resource and commodity shares, together with some of the big bank stocks, had buoyed the Australian index.

Numbers out on September 9 showed consumer confidence slid in September which led to revived hopes of another rate cut by the Reserve Bank of Australia.

South Korea’s Kospi benchmark index also closed up 2.96% at 1,934.20 points. Official data released on September 9 showed the country’s latest unemployment figures for August sitting at their lowest since January this year.

Japan stock market closed higher for the first time in four days, spurred by a rally on Wall Street.

US shares snapped a two-day losing streak overnight, rebounding from Tuesday’s steep losses as the S&P 500 and Dow Jones rose nearly 2%.

An upward revision in US productivity data ahead of the jobs report on September 4 boosted sentiment among investors rattled by slowing growth in China.

Photo AFP/Getty Images

Photo AFP/Getty Images

Japan’s Nikkei 225 index closed up 0.5% to 18,182.39 – leading Asian gains.

Chinese markets are closed on September 3 and 4 for a holiday to commemorate the end of World War II.

In Australia, the S&P/ASX 200 index ended down 1.3% at 5,035.70. Shares in department store operator Myer Holdings dived 24% after it announced plans to raise 221 million Australian dollars ($154 million) through a rights issue.

In South Korea, shares closed flat after revised second quarter growth figures came out in line with earlier estimates released in July.

The country’s economy grew a seasonally-adjusted 0.3% from April to June from the previous three-month period, while it expanded 2.2% from a year earlier.

South Korea’s benchmark Kospi index finished at 1,915.53.

On December 2, Japan’s Nikkei 225 index closed at a fresh seven-year high as investor sentiment was buoyed by talk of the Bank of Japan (BoJ) buying stocks.

The benchmark Nikkei 225 closed up 0.4% at 17,663.22 points.

Earlier, the index had fallen after Moody’s Investment Service cut Japan’s credit rating by one notch to A1 from Aa3.

Moody’s move underlined concerns over Japan’s economy after an increase in the national sales tax was delayed.

However, analysts said the weaker yen, together with the possible move by the BoJ, was continuing to support investor sentiment.

China shares rallied on speculation that the country’s central bank was preparing to reduce bank reserve requirement ratios sooner than expected on recent economic data showing a much weaker economy.Nikkei 225 Tokyo Stock Exchange

In Hong Kong, the Hang Seng index closed up 1.2% at 23,654.30, while the Shanghai Composite rose 3.1%, to 2,763.54 – its best daily rise since September 2013.

Australia’s benchmark S&P/ASX 200 index closed up 1.4% at 5,281.30 points.

The upward movement in Australia followed the biggest fall since October 10 on December 1 amid a sell-off in mining and energy related shares.

Ahead of economic growth figures due out on December 3, the Australian Bureau of Statistics (ABS) reported on December 2 that net exports had added 0.8 percentage points to gross domestic product (GDP) in Q3.

The quarterly rise in exports for the three months to September is a sign that GDP data due out on December 3 will be positive.

As expected, Australia’s central bank maintained its record low official interest rates at its monthly meeting on December 2.

The bank’s interest rate has been at 2.5% since August last year.

In South Korea, the benchmark Kospi was little-changed, closing up just 0.03% at 1,965.83 points.

Japan’s economy, the world’s third largest, unexpectedly shrank for the second consecutive quarter in Q3 2014, leaving the country in technical recession.

Gross domestic product (GDP) fell at an annualized 1.6% from July to September, compared with forecasts of a 2.1% rise.

That followed a revised 7.3% contraction in Q2, which was the biggest fall since the March 2011 earthquake and tsunami.

Economists said the weak economic data could delay a sales tax rise.

PM Shinzo Abe is widely expected to call a snap election to seek a mandate to delay an increase in the sales tax to 10%, scheduled for 2015.

The tax increase was legislated by the previous government in 2012 to curb Japan’s huge public debt, which is the highest among developed nations.

April saw the first phase of the sales tax increase, from 5% to 8%, which hit growth in the second quarter and still appears to be having an impact on the economy.

The economy shrank 0.4% in the third quarter from the quarter previous.

The data also showed that growth in private consumption, which accounts for about 60% of the economy, was much weaker than expected.

The next tax rise had already been put in question by already weak economic indicators.

Speculation had been growing that the Japanese prime minister would call an election next month to gain support just two years after his election.

Local media are now reporting that Shinzo Abe could announce the next election as early as Tuesday to be held on December 14.

The Japanese government’s chief spokesperson Yoshihide Suga said on November 17 that Shinzo Abe was expected to decide on various steps to take amid the “severe economic situation”.

While Shinzo Abe’s popularity has fallen since he took office in 2012, he is expected to win if an election were called, because the opposition remains divided.

In reaction to the negative economic data, the dollar went above 117 Japanese yen before settling back at 115.69.

The benchmark Nikkei 225 index, meanwhile, closed down almost 3% to 16,973.80, marking its biggest one-day drop since August.

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Japan has announced its plans to cut the country’s corporate tax to below 30% in several stages starting 2015.

The move is part of PM Shinzo Abe’s plan to revive Japan’s economy, a pledge made when he took office in December 2012.

Japan’s corporate tax rate, at nearly 36% for large companies operating in the capital Tokyo, ranks among the highest in the industrialized world.

The latest move has been dubbed as Shinzo Abe’s “third arrow”.

The first two arrows launched last year and focused on using fiscal and monetary policies to turn the economy around.

Details in terms of how the tax cut will be implemented are yet to be revealed by the Prime Minister’s office.

Japan plans to cut the country's corporate tax to below 30 percent in several stages starting 2015

Japan plans to cut the country’s corporate tax to below 30 percent in several stages starting 2015

Shinzo Abe’s previous economic reform measures included working with the country’s central bank, the Bank of Japan to embark on an aggressive quantitative monetary easing policy, through monthly bond purchases.

That helped drive down the value of the Japanese yen against the US dollar, and helped to benefit Japanese exporting companies, such as the automakers.

The central bank has also set an inflation target of 2%, which it hopes to achieve in a few years’ time.

Japan had been battling deflation, or falling prices for nearly two decades. But that may be changing, as prices have been rising over the last several months.

That was helped by a raise in sales tax in April this year, to 8% from 5%.

That’s the first increase in the sales tax, in 17 years. And it will rise again to 10% in October 2015.

The gradual increases in the sales tax are aimed at covering rising social welfare costs linked to Japan’s ageing population.

Japan currently has one of the lowest birth rates in the world.

It also has the world’s highest ratio of elderly to young people, raising serious concerns about future economic growth.

Shinzo Abe also said he would end compulsory overtime payments for workers earning over 10 million yen a year and raise the proportion of female managers to 30% by 2020 from last year’s 7.5% rate.

However, economists warned it would be years before Japan benefitted from the planned changes.

“Various legislation must be enacted and it will take time for companies to begin to act. Therefore, it will be 10 to 20 years before the potential growth rate rises,” said Kenji Yumoto, vice chairman of the Japan Research Institute.

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