Amidst economic disruption occasioned by the coronavirus pandemic, Japan’s economy has fallen into recession.
The world’s third-biggest economy shrank at an annual pace of 3.4 per cent in the first three months of 2020, for the first time since 2015.
The coronavirus is wreaking havoc on the global economy with an estimated cost of up to $8.8 trillion, even as the economic downturn continues to take its toll on nations of the world.
Japan did not go into full national lockdown, but issued a state of emergency in April which severely affected supply chains and businesses in the trade-reliant nation.
Reports said the 3.4 per cent fall in Gross Domestic Product (GDP) for the first three months of 2020, follows a 6.4 per cent decline during the last quarter of 2019, pushing Japan into a technical recession.
According to local media reports, consumers in Japan have been hit by the dual impact of the coronavirus and a sales tax hike to 10 per cent from 8 per cent in October.
While Japan has lifted the state of emergency in 39 out of its 47 prefectures, the economic outlook for this current quarter is equally gloomy.
Japan has had more than 16,000 confirmed coronavirus cases and around 740 deaths.
Analysts polled by Reuters expect the country’s economy to shrink 22 per cent during the April-to-June period, which would be its biggest decline on record.
The Japanese government has already announced a record $1 trillion stimulus package, and the Bank of Japan expanded its stimulus measures for the second straight month in April.
Shinzo Abe, Japanese Prime Minister,vhas pledged a second budget later in May to fund fresh spending measures to cushion the economic effect of the pandemic.
The global economy is expected to slip into recession due to the coronavirus pandemic, analysts have said, since the outbreak of the virus last year.
Many nations of the world, including Nigeria, have had to rejig their economic plans and projections amid the uncertainty.
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Despite the policy responses, many nations have experienced economic whirlwind amid disruption in global travel and trade. Many countries have gone into lockdowns to curtail the spread of the virus.
Last week, Germany slipped into recession as more major economies face the impact of sustained lockdowns.
Analysts say Japan faces a unique challenge as its economy has been stagnant for decades, compared to the more buoyant economies of its rivals, the U.S. and China.
Japan also relies heavily on exporting its goods and has little control over consumer demand in other countries, which has been severely impacted by coronavirus lockdowns. Many of its biggest brands, such as car firms Toyota and Honda, have seen sales slump across the world.
Tourism, which has long been a boost to the Japanese economy, has also been hit hard as the pandemic keeps foreign visitors away.
The BBC reported Monday that despite its economic status, Japan appears to be doing better, or less badly than other major economies.
While economists predict Japan’s economy will shrink at an annual pace of 22 per cent in the April-to-June period, it said, they also predict that the U.S. could contract by more than 25 per cent. The 3.4 per cent annual rate of decline in the first quarter also compares favourably to the 4.8 per cent the U.S. suffered in the first three months of this year.
This was the sharpest decline for the U.S. economy, the world’s biggest, since the Great Depression of the 1930s.