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Japan’s economy slows, logging 0.2% annual expansion in 3Q

Japan reports its economy grew at an annual pace of 0.2% in July-September, supported by consumer purchases ahead of a tax hike.

The government reported Thursday that weak exports were a drag on growth. Inventories also declined. But government spending helped support demand, expanding by 2.4%.

It was the fourth straight quarter of expansion but well below analysts’ forecasts.

The quarterly rate of growth was 0.1%.

An increase in the national sales tax to 10% from 8% as of Oct. 1 is expected to drag growth lower in the last quarter of this year.

Past tax hikes have been followed by recessions, but economists say the modest bump in spending ahead of this latest increase suggests that spending and growth may not fall by as much this time around.