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Japan factory output fall underscores uneven recovery

Published on Mar 31, 2014 9:58 AM

TOKYO (AFP) - Japanese factory output contracted in February, data showed on Monday, a surprise decline that highlighted the uneven economic recovery in the world's number three economy as consumers brace for a sales tax hike.

The 2.3 per cent fall in output from January - the first decline in three months - is likely to aggravate concerns about the potential impact of the increased levy, which takes effect on Tuesday.

There are fears that the tax rise to 8.0 per cent from 5.0 per cent - seen as crucial to paying down Japan's huge national debt - will weigh on consumer spending and derail a budding recovery.

The last time Japan brought in a higher levy in 1997, it was followed by years of deflation and tepid economic growth.

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