The world’s third largest economy is shrinking, marking a technical recession for Japan.  The Gross Domestic Product shrank 1.6 percent in the three month period ending with September, the second consecutive drop – and coming as a surprise to economists.

“April’s sales tax completely destroyed Japan’s economy -- no part of Japan’s economy looks encouraging,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.  “Today’s data will leave another traumatic memory for Japanese politicians about sales tax hikes.”

Japan’s economy had been forecast to rebound by 2.1 percent in the third quarter.  But consumption – which drives 60 percent of Japan’s economy – and exports remained weak.  Companies were left with huge inventories to work off.

The second part of that sales tax increase was to happen next year.  But Prime Minister Shinzo Abe could as early as Tuesday announce his decision to delay that hike and call for a snap election to shore up his support.