Japan falls into recession due to pandemic, worst yet to comeEuropost
Japan has plunged into recession as the coronavirus pandemic ravaged the world's third-largest economy, news wires reported. The Japanese economy shrank for the second consecutive quarter in the three months to March.
Gross domestic product (GDP) contracted an annualised 3.4% in the first quarter as private consumption, capital expenditure and exports fell, preliminary official data showed, following a revised 7.3 decline in the October-December period, meeting the technical definition of a recession. The median market forecast was for a 4.6% contraction in the first quarter.
The last time Japan suffered recession was in the second half of 2015.
The coronavirus pandemic was massively disruptive for economies in many countries, particularly in trade-reliant nations such as Japan. Private consumption, which accounts for more than half of Japan's $5 trillion economy, slipped 0.7%, versus a 1.6% drop expected by economists. The jobless rate in March rose to its highest in a year, while job availability slipped to a more than three-year low. Travel restrictions caused by the pandemic have also decimated the tourism industry as the Japanese economy has relied more on overseas visitors, especially those from Asia, in recent years. The number of overseas visitors to Japan in March took a record 93% nosedive to 193,700 from 2.76m a year earlier, the Tourism Agency said.
The pandemic also forced the International Olympic Committee and Japan to postpone this summer’s Tokyo Games by one year.
Conditions are expected to have worsened in Japan in the current quarter after PM Shinzo Abe in April declared a nationwide state of emergency amid a rise in coronavirus infections. It was lifted for most regions on Thursday, but remained in effect for some big cities including Tokyo.
Analysts polled by Reuters expect Japan's economy to shrink an annualised 22.0% in the current quarter, which would be the biggest decline on record and underscores the collapse in activity that is expected to see the worst global slump since the Great Depression of the 1930s.
The government has already announced a record $1.1 trillion stimulus package, and the Bank of Japan expanded stimulus for the second straight month in April. Abe has pledged a second supplementary budget later this month to fund fresh spending measures to cushion the economic blow from the outbreak.