TOKYO (Reuters) – Japan’s economic situation all of a sudden shrank an annualized 1.6 percent in July-September after a severe contraction in the previous quarter, most likely hardening the view that leading Shinzo Abe will certainly postpone a 2nd sales tax explore following year. COMMENTARY: YOSHIKI SHINKE, PRIMARY ECONOMIST, DAI-ICHI LIFE RESEARCH INSTITUTE “I did not expect the development figures to be this weak. “We had actually expected capital expense would underpin the economic situation however the weak capital expense in these GDP numbers raises stress over the economic overview. And also taking into consideration the huge fall that we viewed in consumer spending in the 2nd quarter, the level of its rebound looks particularly weak. “I assume the Bank of Japan will need to reduce its growth projection for this financial year when it releases reviews of its financial as well as rate forecasts next January. Along with that, the speed of increase in consumer prices will decrease offered oil price falls while market conjecture regarding further relieving will most likely raise.” JUNKO NISHIOKA, CHIEF FINANCIAL EXPERT, RBS STOCKS JAPAN “Domestic demand was very bad, with consumption and also capital expense both considerably worse compared to anticipated. This setting makes it increasingly difficult to call for an increase in the usage tax obligation, making it practically particular that they’ll avoid the tax hike and also hold a breeze election.” “That domestic need was so bad was unanticipated … It seems that the bad weather condition this summer season could have played a part, yet the general trends are not that bad. “If you take a look at other fundamental indications, they have actually moved over to an improving trend, so if this continues, even though this quarter was unfortunate, the next quarter ought to be much better.” STEFAN WORRALL, SUPERVISOR OF EQUITY CASH SALES, CREDIT RATING SUISSE “(The GDP figures) provide almost One Hundred Percent assistance to conjecture that there’s visiting be an early election. If there was any sort of staying uncertainty among market particpants that there was a choice yet to be made, this outcome has killed those questions. It’s now a done offer. “The sales tax obligation walk was never ever part of Abenomics, to transform deflation into inflation. It was actually a speed bump that runs the risk of stopping those various other policies from obtaining take-off rate. Its elimination offers a far better chance for other elements of Abenomics to prosper. “It’s not risk of JGB default that is the most significant problem in Japan currently. It’s the threat that inflation plans fail. (Fiscal restoration concerns) are a 2nd order trouble. One of the most crucial plan for Japan’s ability ahead out of its slump would be to try and also induce rising cost of living expectations amongst the exclusive sector.” YUICHI KODAMA, CHIEF ECONOMIC EXPERT, MEIJI YASUDA LIFE INSURANCE COVERAGE “The data shows residential need stayed weak as harm from the April sales tax has gone on longer compared to previously expected. The unfavorable contribution from private inventory was also one more major consider GDP contracting. “Considering other financial information, the economy seems to have struck the bottom around summertime to fall as well as it will likely enhance in the October-December duration although the rate of recuperation is expected to be slower compared to the forecasts by the federal government as well as the Financial institution of Japan. “I assume the BOJ will wait as well as analyze the effects from its newest financial alleviating in late October for some time. However it will probably have to start new alleviating measures at some point following financial year as it will be hard to attain its 2 percent rising cost of living objective.” KENICHIRO YOSHIDA, SENIOR ECONOMIC EXPERT, MIZUHO RESEARCH INSTITUTE “The consensus was much higher. Yet the reading is -1.6 percent; it’s much weak than we expected. “Capital expense is really weak – it’s typical in Europe and the United States. “The growth of usage is very weak; that’s one factor that the government could decide to delay the sales tax obligation. “It will certainly be challenging to get to the BOJ’s inflation target this year.” (Reporting by Thomas Wilson, Kaori Kaneko and Elaine Exists; Editing by Chang-Ran Kim and also Edwina Gibbs)Budget, Tax & & EconomyFinanceJapanBank of JapanShinzo Abe