Competition between Korea and Japan in the export market may become more heated as Japan raised its consumption tax rate from 5 to 8 percent on Monday in a bid to rein in mounting public debt and tackle rising welfare costs.
It's the first consumption tax rise in the country in 17 years. To keep consumption from slowing, Tokyo also announced a stimulus package. But according to a recent poll, more than half of Japanese citizens said they would cut spending if taxes went up.
Analysts in Korea say less demand in Japan would require the nation to look overseas for markets, which would stimulate competition with Korea. Last month, Japan saw its first export growth in more than a year.