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Stimulus needed to prevent treble-dip

The latest data from Japan painted a gloomy picture of current conditions and suggest the risks of a treble-dip are increasing. GDP should have returned to growth in Q3, but could fall again in Q4. In our opinion, the only thing that will prevent the economy from slipping back into recession is further policy stimulus. The government is poised to step in with the third supplementary budget, but the boost to growth will be partially offset by the tax rises and spending cuts needed to pay for it.

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