Japan’s return to its fourth recession in six years has put the credibility of ‘Abenomics’ at risk as Prime Minister Shinzo Abe struggles to lift Japan out of two decades of deflation while a shrinking economy makes the task of reducing a ballooning debt pile even more difficult.

Under pressure to maintain his popularity, Abe delayed the second bump in the sales tax hike due for October 2015 by another 18 months. The decision to put off the levy will give Abe some room to bolster fiscal stimulus and revive a recession-mired economy.

Gross Domestic Product shrank an annualized 1.6 per cent in the July-September 2014 quarter after a massive 7.3 per cent contraction in Q2 as Asia’s second biggest economy struggled to ward off the effect of a hike in the sales levy to 8 per cent from 5 per cent in April. The recession has forced Abe to put off a further rise in the tax to 10 per cent which was set for October 2015.

Worried over the decline in his popularity, Abe has dissolved the Parliament and called for early elections which may extend his mandate until 2018, allowing him to help pull Japan’s economy out of crises.