Japan's deficit hits record as economic growth slows

Japanese shoppers Analysts had been expecting a big boost in consumption ahead of tax increases

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Japan's current account deficit widened to a record 1.5tn yen ($15bn; £8.7bn) in January, the largest since records began in 1985.

In further bad news, the country's economic growth figures were also revised downwards.

Japan's economy grew by 0.7% in 2013, down from an initial estimate of 1%.

Investors reacted with disappointment to the news, with the benchmark Nikkei 225 index falling by 95 points, or more than 0.6%.

From October to December 2013 Japan's economy grew by just 0.2%, after earlier estimates showed an increase of 0.3%.

Tax increase

The sluggish growth and growing deficit come just before a planned sales tax increase, scheduled to take effect in April.

Many economists had expected growth to pick up towards the end of 2013, as consumers spent ahead of the tax rise.

But the latest revisions show consumer spending increased by 0.4% in the fourth quarter of 2013, revised downwards from 0.5%.

Japan's trade gap also rose to a new record last month, increasing by 71% to 2.79tn yen in January, official figures showed.

That was largely down to weak export figures, which were impacted by global turmoil in emerging markets and a weakening yen.

Japanese Prime Minister Shinzo Abe says he plans to push ahead with the sales tax hike as a way to tackle Japan's debt.

However, to counteract the increase, which is scheduled to go from 5% to 8% - Mr Abe unveiled a stimulus package of 5.5tn yen in December.

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