Japan Abe adviser Honda calls for stimulus after 'shocking' GDP

Shoppers outside a  luxury department store at Tokyo's Ginza shopping district on Nov 16, 2014. Japan's economy unexpectedly shrank an annualised 1.6 per cent in July-Sept after a severe contraction in the previous quarter. -- PHOTO: REUTERS
Shoppers outside a  luxury department store at Tokyo's Ginza shopping district on Nov 16, 2014. Japan's economy unexpectedly shrank an annualised 1.6 per cent in July-Sept after a severe contraction in the previous quarter. -- PHOTO: REUTERS

TOKYO (Reuters) - Japan's third-quarter economic slide was "shocking," an economic adviser to Prime Minister Shinzo Abe said on Monday, calling for the government to consider measures to support the economy.

The economy unexpectedly shrank at a 1.6 per cent annualised pace, throwing Japan into recession and setting the stage for Abe to delay an unpopular sales tax hike and call a snap election just two years after he took office.

"This is absolutely not a situation in which we should be debating an increase in the consumption tax," said Etsuro Honda, a University of Shizuoka professor and a prominent outside architect of Abe's reflationary policies. "Debate needs to focus on how to support the Japanese economy," Honda told Reuters.

Abe was already expected to announce as soon as Tuesday that he would delay the tax increase, set to occur next October, before the surprise GDP data.